Chinese exporters scramble to cope with Trump tariff hike
Facing a possible U.S. tariff hike, one of China’s biggest ball bearing makers, Cixin Group, is weighing plans to rush shipments to American customers before the increase makes its sales unprofitable.
The company in the eastern city of Ningbo is among exporters of goods from motorcycle parts to electronics that are scrambling to cope with President Donald Trump’s higher duties by shipping early, raising prices or finding new markets.
The 25 per cent increase would turn Cixin’s profits to losses in the U.S. market, which takes 30 per cent of its exports, according to Wang Liqiang, a company manager.
“We are considering manufacturing as many ball bearings as possible for the U.S. market before the imposition of tariffs,” said Wang. “We can do it by working overtime.”
Some companies are looking at ways to hide their Chinese origin
by shipping goods through other countries.
“Maybe customers will buy from South America, and then South America sells to the U.S.,” said Yvonne Yuan, a sales manager for Shenzhen Tianya Lighting Co., a manufacturer of LED bulbs.
Trump says higher duties on $ 50 billion of Chinese goods are meant to punish Beijing for
stealing or pressuring foreign companies to hand over foreign technology.
The plan targets goods U.S. officials say benefit from improper Chinese policies including machinery, industrial components and aerospace, telecoms and other technology.
Trump left time to negotiate. A public comment period runs through May 11, with a hearing scheduled May 15.
Economists and Chinese officials say the tariff hike’s overall impact on China should be limited.
But for exporters that depend on the U.S. market, the potential costs are alarming.
Knock-on effects could greatly increase the impact, Moody’s Investors Service researchers said in a report.