Companies Already Shifting Supply Chains Due to US-China Trade Dynamics, Lobbyist Says
Already supply chain shifts are underway as multinational corporations see the possibility of a prolonged trade dispute with China as too risky, Nicole Bivens Collinson, president of government relations at Sandler Travis, said during a conference call with Merrill Lynch. "Collinson believes it will take two to three years for most companies to fully shift capacity out of China," Merrill Lynch analyst Rafe Jadrosich said in a Sept. 27 research report. "However, she also noted several risks that could slow the process and result in near-term production inefficiency."
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Industries that use many components and outsource manufacturing have the best chance of reducing the tariff exposure, Jadrosich said. "Products with multiple components have the flexibility to move the country of origin outside of China without significantly disrupting their existing supply chain," he said. "For example, a shirt that is made with fabric produced in China, but sewn together outside of China would not be subject to the tariffs. Raw material producers and fabric mills could remain in China as long as the downstream assembly is shifted to a different country. Industries that manufacture products that do not undergo significant changes (mining or agricultural) before they are imported to the US have very few mitigation options to avoid tariffs," he said.