Welcome to the Denver South EDP Guest Blog Series
From time to time, we like to invite friends and colleagues to contribute timely and relevant articles of interest to our stakeholders. Given the recent escalation of the “Trade War” with China, we turn this week to Sean Doherty. Sean Doherty is a Colorado native and graduate of Metropolitan State University, living and working in Hong Kong, Shanghai, and Nanjing, China. Sean represents the Denver South Economic Development Partnership as the Greater China Exchange Coordinator, focused on fostering the exchange of ideas, strategies, and talent between China and the metro-Denver area. Some of the services Sean provides, are: product sourcing, factory audits, trip coordination, and consulting on the China market and APAC region. In 2016, Sean was selected as a Jiangsu Province Youth Friendship Ambassador. You can reach out to Sean directly, right here.
By Sean Doherty
Almost everyone I speak to these days is curious about the “on-the-ground” impact of the trade war.
They ask, “What do people in China think about that?” “Have you seen prices go up?” “Are you noticing a slow-down at factories?” Since the start of the year, I’ve helped my clients export over 25,000kg of product from China, all from product categories that were not subject to additional trade tariffs. And then it happened. One week, I assured my client that their upcoming shipment of lighting fixtures would not be affected by the 25% tariffs that had been levied, and then the next week I found myself explaining that those same products were now subject to a different list of tariffs, this one at 10%.
Apart from these personal anecdotes, my contacts within a network of factories have portrayed optimism across China,
and the data supports the sentiment. According to CNBC, “China’s annual export growth in August moderated slightly to 9.8 percent…only slightly below recent trends.” Ironically, when speaking with factories here about the US-China Trade War, the conversation often turns towards their more pressing concerns about the influence of Europe’s slowdown. The reverberations have been felt in other economies around the world, too. For example, farmers in Brazil are finding it cheaper to import US soybeans for domestic use, in order to direct more of their own crop as export to China, rather than increase production in Brazil.
Regardless of the ultimate source of those soybeans, the impact still leaves an aftertaste—in the form of higher prices for consumers.
Tariffs from both sides make the cost of doing business via international trade more cost-prohibitive and places a premium on market access, while forcing consumers to bear the cost. An increase in prices will, all else being equal, inevitably lead to lower weight of soybeans, light fixtures, and other products being shipped overseas, which means less sales for producers, and more expensive products for consumers. And when it comes to paying higher prices for consumer products, the sentiment I hear from every day folks in US and China is the same: no one is excited about that consequence of the trade war.
