What Can Businesses Do Among Trade War?

From Forbes.com

By Brian Peccarelli

The Trump administration introduced tariffs on an additional $200 billion in Chinese products, yesterday. These come on top of tariffs on $34 billion in Chinese goods that went into effect in July and another $16 billion that took effect in August.

U.S. business leaders are growing increasingly concerned about the impact this escalating trade war with China will have on their businesses. Last month, the U.S. Trade Representative’s Office held a six-day session of public hearings on the issue during which companies large and small voiced their fears. The group included all types of companies, from a 20-person paint brush manufacturer that relies on Chinese hog bristles and warned it would be “put out of business immediately” if the tariffs went through to a multinational sporting goods manufacturer that projected the tariffs would make the company’s safety equipment cost-prohibitive for American consumers.

U.S. and Chinese trade officials are scheduled to meet later this month to continue negotiating an alternative to this global trade war, but whether or not a deal is reached quickly – or ever – businesses are learning an important lesson in “stroke-of-the-pen risk.”

As we’ve all seen countless times over the past several years of frenetic regulation, deregulation, executive orders, and global policy whipsaws, any business’ fortunes can be changed literally overnight if they are not nimble enough to bend and flex with the turbulent forces of legislation, regulation, and litigation.

Achieving that kind of corporate agility is not easy in a global business environment where companies routinely draw on goods and services from vast networks of third-party suppliers. This is especially true when the country in the crosshairs of a trade war is China. The country officially became the world’s largest exporter of goods, ranging from commodities like cotton and soybeans to electrical machinery and plastics, in 2009, and many global supply chains and business forecasts have been built around access to inexpensive Chinese goods.

Simply flipping the switch and changing that overnight is not an option for most businesses. However, if we’re to learn anything from this current standoff between U.S. and Chinese trade officials, it’s that businesses need to be able "switch on a dime" – not just for today’s trade impasse, but also for tomorrow’s crisis du jour.

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