After the tit-for-tat retaliation last month, the tariff levels have effectively placed a trade embargo between both countries.
But what happens now that the US and China have suddenly decided to drop back tariff levels again?
If you can absorb that, it means trying to rush as many orders out in the next 90 days as possible. However, supply chains can't turn back on with a flip of a switch.
And even for factories resuming production, it's not that simple. It takes time for production lines to get back to full speed and some may have even already reallocated labour work during the past month. This may take weeks in certain situations.
All this is not to mention the thousands of backlogs that have been caused in the last month that still needs catching up to do. If you haven't already booked shipments from China to the US, you're already probably too late.
At best, these delays might just last for a month or so. However, they could easily be prolonged for the next three to four months in some cases as well. That will make for a challenging summer for major firms reliant on supplies/inventories from China. If you're a big player like Amazon or Walmart, you'll do fine. But for the smaller guys, it's going to be tough.
So, any major disruptions from the initial tariffs that caused the trade embargo was due to hit around mid-to-end May at the earliest. But I guess, that can be course corrected now.
All of this will lead to a bullwhip effect that will just exacerbate the supply chain problems as listed above.
And if tariffs are to be raised again, then we'll just start this whole process once more. And again, it will take months for supply chains to return to normal - if it ever does.
So, yeah. Tariffs policy can change overnight but supply chains cannot.
This article was written by Justin Low at www.forexlive.com. Read More Details
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