Impact of Tariffs on Logistics

US China Trade War and tariffs

The new trade wars and tariffs imposed by the US and China left many importers in the US looking for answers. Nobody wants to pay higher duties which translates into higher prices to the consumers. Which will result in consumers cutting down on their purchases.

In general, blanket tariffs are counterproductive. Nobody benefits from such practices. It reduces customer confidence.

In the wake of the new tariffs imposed by the US on Chinese products,  importers found themselves forced to increase their prices to offset the increase on the duties being paid or to switch to importing similar products from other countries that are not subject to the new tariffs.

The latest currency devaluation by the Chinese Government has in a way offset the last round of tariffs however; consumer confidence has been affected as customers perceive the trade wars as a sign of instability.

How will the new Tariffs affect Logistics.

1- “Logistics Companies” pay close attention to tariffs as it affects the supply chain. They have to be ready to offer new solutions to their customers. Many International 3PL Companies are seeing an increase in imports from China as Importers build up their Inventories before the Holiday season and before the new tariffs take effect.

2- Freight Forwarders  have noticed and increase in Ocean Freight Shipping from Vietnam and other Countries. It is noted that Chinese companies are shipping their products from Vietnam to avoid paying the additional duties.

3- US Companies who re-export some of their products have opted to shipping directly from China to South America for Example.

4- Companies who Export to South America are using the services of Bonded warehouses to hold their product in bond  instead of paying the extra duties until the product is exported.

5- Importing companies are getting better at negotiating Freight rates in order to compensate for some of the extra duties they might be paying.

The Bottom line about the New Tariffs

In spite of all the hype, we still see more container ships being built, we see shipping volumes increase across the world. The US trade deficit rose by 50 Billion even though the export volume has increased. That means more cargo is entering the US Market which means more cargo is moving to the US ports.

Experiences 3PL Companies are prepared to tackle such issues and advise their customers on the best strategy to adopt.



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