Support for Customers Against Trump Tariffs
Immetech’s thoughts and approach to the recent tariff changes
The United States already started to increase import tariffs from 10% to 25% against China on US$200 billion worth of Chinese products in May. Trump’s latest threat is to slap still more tariffs in July, meaning that virtually all imports to the US will be covered. In this scenario it is reported that US consumer price inflation overall will be 0.9% higher than in 2017, and 1.5% higher than in 2018. US consumers would feel considerable pain from this trade war.
It is definitely worrying news for American companies who are dealing with China. Especially in the molding and tooling industry, where it is not easy to change when you have already set up a supply chain. It involves know-how, equipment accuracy, labor qualifications and much more.
Immetech also worries about the impact on our American customers. Recently we did a comprehensive analysis and try to find solutions to support our customers against the tariff increase. We have found some positive factors:
- China decreased its national VAT from 17% to 16% from May 1st, 2018, and continued to decrease VAT from 16% to 13% on April 1st 2019, which is a 4% return to the manufacturing industry.
- The US dollar exchange rate against the RMB appreciated from 6.30 to 6.90 since last April, with a more than 8% benefit for Chinese exports.
- In order to satisfy the increasing demand from domestic and international markets, the Chinese government encourages manufacturers to upgrade their equipment and be innovative on technologies and branding. Last year Immetech upgraded significant mold making equipment and facilities, improving our efficiency more than 30%.
- China enforces its environmental policy, therefore many industries are improving and upgrading the manufacturing process. Some outmoded industries will be replaced by hi-tech manufacturing.
- The One Belt One Road strategy is helping a lot of Chinese manufacturers to expand globally, increasing their capability for growth.
With government’s support, we are confident that Immetech can continue to provide high quality products and services to our customers. We would like to make our prices more favorable to confront the tariffs issue. Our goal is to make our customers more competitive in their market.
What’s next for Trump’s tariffs? Nobody knows. But remaining strong with your suppliers is important to grow substantially.