The U.S.-China Tariff Negotiation Deadline Is Coming. Are You Prepared for the Worst?

The U.S.-China Tariff Negotiation Deadline Is Coming. Are You Prepared for the Worst?

The deadline for tariff negotiations between the United States and China is about a week away. While President Trump recently made it clear that the March 1st deadline isn’t set in stone, officially, the two trade powerhouses have less than a week to hash out a new trade deal and avoid a massive 25% hike on imported goods from China.

Even though the deadline is fast approaching, recent trade renegotiations like the revised NAFTA deal suggest that the standoff between the U.S. and China has a good chance of being resolved by the 11th hour. With talks ongoing, the latest news indicates that the outline of a resolution is starting to take place.

The U.S. and China have been locked in a stare down for years now. Under President Trump, the U.S. has looked to reduce the growing trade deficit between U.S. goods exported and Chinese goods imported. The resulting slew of initial tariffs had a negative impact on sanction-targeted goods and industries on both sides of the Pacific.

Caught in the middle of this trade conflict, not surprisingly, is the freight forwarding industry. The threat of impending sanctions helped container shipping experience a healthy holiday period as importers front-loaded shipments from China in order to get their goods to the U.S. ahead of the March 1st negotiation deadline.

Read More: China-U.S. Trade: Front-Loading Bonanza May Not Last

Now, freight forwarders are back on uncertain terrain: with nearly $500 billion worth of Chinese goods at risk of incurring a mammoth 25% tariff hike, can freight forwarders survive another escalation in this trade war?

Simply put, it’ll take some work.

Freight forwarders: Prepare for the Price Discussion

The added cost of sanctions, tariffs, and surcharges are usually bundled into the rate provided by carriers and NVOCC’s. It’s left to the freight forwarders to convey price hikes to their customers.

The fact is, for all your price shopping, if the 25% hike is enacted, prices will go up for your regulars. The best rate available is still likelier to be higher than anything your customers are accustomed to from a week ago, let alone a year ago.

Communication is key here. Keep up with the news, talk to your partners, and convey any pricing changes to your customers with honesty and transparency. It’s a tough conversation to have, but a necessary one. Be up front and clear with your customers, and be open to exploring mutually beneficial solutions with them.

Proactively Scout New Trade Opportunities

It shouldn’t take a trade war to remind you that diversifying the lanes you serve is important. Single-lane forwarders are the most at-risk when new tariffs go into effect, so if you haven’t yet explored other opportunities in global trade, get to it. Fast. China is the U.S.’s biggest trade partner, and nearly 16% of total trade volume won’t disappear overnight. But the remaining 84% of volume represents business your logistics business can help with in the event you experience a dip in traffic in line with steep sanctions.

You should also study the list of items subject to tariffs. Some products and goods will be exempt from hikes. Diversifying doesn’t just mean finding new trade lanes; handling new goods in your tried-and-true lanes could be just as lucrative.

Help Is out There -- Find It

You may decide to diversify the lanes you serve, but your legacy customers may not have the same flexibility. In the end, this isn’t about just protecting yourself against tariffs: you need to do everything you can to keep your customers from going out of business, too.

Find the right help in a new trade environment. A great place to start is to find a technology-enabled partner that could help reduce your procurement costs, and not just on a quote: a technology partner that can assist you with the nuances of freight forwarding like documentation and tracking will free you up to talk to your customers and find new business.

The savings the right partner can get you will be immense in any trade environment. They might ensure your survival in the worst possible one.

Looking for that technology-enabled partner? You're in the right place. Try CoLoadX today.

By: Fauad on Feb. 22, 2019, 10:10 a.m.