Nowadays, much of the world’s industrial activity centers around China. According to some sources, the manufacturing power of China alone exceeds that of the next nine largest industrial countries combined. This is because production in China is cheaper, more efficient, and of higher quality than in many other parts of the world.

Unfortunately, this issue has been complicated by the Trump Administration’s announcement that it will impose a 10% tariff on imports from China and China’s response by imposing tariffs on US products. Because China is an industrial powerhouse in the global economy, it is an invaluable trade partner to many US businesses, and these tariffs may challenge or jeopardize some of these trade relationships.

While the administration’s goal with these tariffs is (supposedly) to stimulate domestic production, the truth is that the solution is not as simple as exiting China. China has one of the world’s most established, robust supply chains. Unfortunately, the United States does not have the infrastructure to match the efficiency of the market in China — not to mention the fact that bringing this production into the US could divert our resources and labor away from the areas in which our manufacturing sector actually excels.

Navigating the uncertainty of tariffs

So, how should a business in the import/export industry approach the unique challenges these tariffs and economic conditions have on the sector? As with any challenge one doesn’t know how to approach, it’s always best to consult an expert. In this case, it means a skilled and experienced supply chain management company like CPG Sourcing (CPG).

CPG helps import-based businesses manage the complexities of supply chain management in the China market. Having been in business since 1978, CPG is one of the oldest and most reputable names in the supply chain management sector, helping their clients optimize their supply chain holistically. 

Although the economic landscape amid these tariffs might seem intimidating, the team at CPG urges businesses in the import/export sector to use this as an opportunity to come out ahead and gain a competitive advantage. 

“Remember, every US company is experiencing the same difficulties and challenges,” says Michael De Clercq, CEO of CPG. “This levels the playing field, creating opportunities for businesses that adapt and innovate. The question businesses should be asking themselves is how they will outsmart their competitors.”

How China Performance Group can help businesses overcome the challenges of tariffs

One way in which businesses can leverage this situation to gain a competitive edge is by negotiating better prices. De Clercq points out that Chinese manufacturers face deflationary pressures, which leaves them open to renegotiating terms. 

“Use this opportunity to secure bulk discounts, optimize payment schedules, or reduce overall costs,” he explains. Although imports are still subject to tariffs, renegotiating can help offset some of the heartache from their added expense.

While De Clercq and his team assert that moving out of China entirely is not the solution, they suggest using this opportunity to diversify — just without compromising. “Keep your sourcing program in China while exploring opportunities in other regions,” he says. “This keeps you from becoming a ‘captive buyer.’ A buyer with multiple options makes suppliers work hard for their business and maintains the upper hand at the negotiating table.”

Beyond diversification, businesses in the import/export sector should strive to build resilience in their supply chain. De Clercq suggests methods like developing inventory buffers, establishing contingency plans, and ensuring suppliers have dual production capacities. “A resilient approach minimizes disruptions and strengthens your supply chain, mitigating some of the risks of staying in China,” he says.

That being said, navigating all of these changes can be difficult for businesses — especially for small businesses that don’t have experience with such challenging economic conditions — which is why it is important to work with an experienced, trusted sourcing provider like CPG. Their team has decades of experience working in China sourcing and has overcome a plethora of challenges, from geopolitical strife to economic instability. For them, these tariffs are just another bump in the road that they can help their clients overcome.

While many businesses in import and export are understandably concerned about what the future may hold with these tariffs being implemented, supply chain management companies can help businesses make the most of a bad situation by renegotiating more favorable terms and strengthening their supply chain to a more resilient position. If you are in the import/export sector and rely on China as part of your supply chain, now is the time to contact a supply chain management company like CPG to give yourself a strategic advantage in these uncertain times.