US-China trade war fires bonanza for advisory firms

Consultancies seeing jump in demand for their services

SHANGHAI: As US and Chinese firms rush for outside expertise on how to handle fallout from the escalating trade war between the two nations, consultants on everything from management to logistics say they have seen soaring demand for their services.

Washington and Beijing have been locked in a tit-for-tat trade battle, with both sides slapping steep tariffs on each other’s goods in a fight that has sparked dire warnings of economic doom and gloom.

With companies hit hardest by the tariffs such as soybean producers and auto manufacturers grappling to relieve pain from the conflict, consultancies on international trade have been cashing in.

Firms like Deringer in the United States and ETCN in China say they have been giving advice to clients ranging from which countries to turn to for alternative sources of supply to how to legally re-classify products to avoid tariffs.

“Our value has never been higher ... when I talk to people, they are desperate for the expertise,” said Robert Stein, vice-president of Mohawk Global Trade Advisors in the United States.

He added that the company, which provides international trade consultancy services from offices in five US states, has seen a 20% jump in consulting activity since the trade war began heating up, around the first quarter of this year.

Amy Magnus, director of customs affairs and compliance at Deringer, said her firm had seen increasing appetite for its consulting services, with particular interest in so-called tariff engineering – structuring the production process to legally sidestep tariffs.

“A company might import components, partially assembled product, or change the final product in a way that changes the classification of the good to a new product – one that is not subject to the tariff,” said Magnus.

Deringer says on its website that it is the largest privately held customs broker in North America.

US imports from China that will be most affected by tariffs include cell phones, telecommunications equipment, toys and sporting equipment, while US exports to China that will be hit include civil aircraft, plane engines, cars and soybeans.

One medium-sized US gardening equipment supplier which has just hired a logistics expert is considering “complete knockdowns” for products that may be affected by tariffs, said a person with direct knowledge of the matter.

That would mean products sold by the firm that are usually made in China would instead be shipped to the United States as individual components before being assembled there, thus avoiding tariffs on the finished items, he said.

The source declined to be identified as he was not authorised to speak to media and did not want the company to be named due to the sensitivity of the matter.

Meanwhile, Chinese import and export consultancy ETCN in the first-half of 2018 saw a 40% on-year increase in US users of its website, which sets out compliance and customs information.

The firm charges different rates for services ranging from access to real-time tariff information and trade data to an online database of company trade histories. — Reuters