The latest round of trade talks between Beijing and Washington could jeopardize any deals made between the two countries if President Trump’s new tariff hike on Chinese goods moves forward.
The Trump administration also recently announced new tariffs on steel and aluminum from Canada, Mexico, and the European Union, which has prompted discontent from many of the U.S.’s allies and major trading partners. The most recent proposal from the U.S. indicated a potential 25% tariff on over $50 billion of Chinese high-tech goods in response to allegations that China pressures foreign companies to hand over technology. Beijing has indicated all of the economic and trade achievements made to date will be void if the U.S. introduces any trade sanctions or tariffs.
As these talks continue to progress, there doesn’t appear that a deal will be finalized anytime soon, causing continued uneasiness and speculation throughout the global supply chain.
These tariffs will have wide-ranging impacts on many sectors. Anheuser Busch, the world’s largest beer maker, has released cautionary comments against rushing into purchasing aluminum imports. Other larger aluminum importers like Coca Cola, PepsiCo, and Dr. Pepper Snapple Group, to name a few, issued a joint statement which indicated that “…tariffs or quotas on imports of primary aluminum would have a major negative impact on downstream U.S. manufacturers like food and beverage companies.”
The American International Automobile Dealers Association made similar comments last week – stating that tariffs on both steel and aluminum, which are crucial to the automotive industry, could significantly raise prices.
This is also affecting oil companies like Exxon as their Beaumont, Texas oil refinery expansion (which produces more than 350,000 barrels a day) are vulnerable to changes in pricing on these goods.
The wide-reaching impacts for many manufacturing and distribution sectors are expected to similarly affect many of our clients, particularly from a perspective of purchasing, inventory levels, and even potential buy/sell transactions, as the uncertainty of these tariffs continues to roil the global economy.