- Some businesses say the movement of supply chains from China more expensive than the absorption of Trump’s tariffs.
- Companies are negotiating with manufacturers to keep costs down and reduce customer pain.
- A supply chain expert said that uncertainty in politics can pose bigger challenges in business planning.
Trump administration tariffs on goods imported from China have left businesses to ask if their supply chains should move elsewhere.
But some say the cost of finding new suppliers and shifting production is not possible.
“It may be more expensive to move your supply chain than to eat the tariff,” said Michael Wieder, co -worker and Lalo’s CMO, a brand of children’s products with much of its supply chain in China, told Business Insider. “We do not want to respond to things that will end up be a waste of money and waste of time.”
Wieder said products for children tend to be more regulated for safety reasons, so he will not be able to quickly replace factories and engineers who meet requirements.
“We will work with our suppliers to negotiate our costs where we can make sure it does not affect our business. But the fees are inflationary, there is no doubt about it,” he said.
Trump issued an executive order on February 1 that any product from the PRC, as described in the Federal Register notice, will face an additional 10% task at the top of the regular rate. He cited China’s failure “to curb the final source of many illegal drugs distributed in the United States” as a reason for raising tariffs.
While most of the drugs seized on the border come from Mexico, the US International Trade Commission praised at a 2019 conference that 97 percent of Fentanil The US is produced using precursor chemicals from China.
While former President Joe Biden held most of the fees for Chinese imports that Trump implemented during his first administration and increased fees by up to 100% on target products Like electric vehicles and solar panels, it also kept exceptions for categories of health care items such as wheelchairs and children’s products. However, these exceptions are not mentioned in Trump’s latest executive order for China.
“We are doing everything in our power to foster the administration to keep those exceptions,” said Wieder, “it’s not right to foster costs for things that parents have to buy for their children and their babies. But we have ours Blinders, we do not control what is happening in Washington. “
Other businesses say they cannot move their chain of supply from China without interrupting the main products, and even then, the mass cannot happen soon.
Jimmy Zollo, the founder of the Adaptive Wear Joe & Bella brand, said that many of their highly specialized products, such as magnetized and double zippers that could lie on the ankle, could simply not be sourced outside China. This can affect their main customer basis: people living with cognitive changes and limited mobility.
“Changing a manufacturer is not just like packing a suitcase and the movement above,” Zollo said, “it will surely take a few months back and forth if they can even find the right fabric, chain and coloring – composed that with the fact that there are countless American businesses doing what we are doing, which is trying to find out what other potential partners exist there in the market. “
In addition to ordering more of their most popular products at the end of 2024, Zollo is now negotiating costs with manufacturers to reduce tariff impacts because its customers are likely to have no level of disposable income that will ‘they allow them to pay higher prices.
“At this point, there is a risk of staying. There is a risk of going, there is a risk of doing nothing,” he added.
Who will pay the price
Customers are likely not to receive the full impact of tariffs because any party interested along the supply chain absorbs part of the shock, from the supplier, manufacturer, carrier, to the final retailer, said Yossi Sheffi, director of the MIT Center for MIT Transport and logistics.
However, the speed with which policies are rolling and withdrawing can pose a bigger challenge, Sheffi said.
“The main problem is that no one knows what to do because one day we have 25 percent in Mexico and Canada, and then the next day it stops for a month,” Sheffi said, “things are being worn and out of seemingly strange, so that is difficult to plan.
Sheffi added that the cost of moving a chain of supply can be “prohibitive”, and the business strategy is now to wait and see.
A source familiar with the situation in customs and the protection of the US Border said that they do not know if previously imports exempt from tariffs from China are left without duties. Due to the large number of questions they have received, they are still working through details. The US Trade Representative Office did not respond to commentary requests.