In preparation for possible future trade tension, many companies are stocking up on imported items to avoid tariffs in the likelihood that the U.S. and China cannot come to terms. The move comes amid a 90 day truce between the two nations that halted certain tariffs on both sides, but tensions are still soaring as the two major powers negotiate. The tension has caused turmoil among traders on Wall Street, and companies are adjusting their practices in order to maintain profits during the ongoing disputes.
One way retailers are planning ahead to reduce costs is by stockpiling Chinese made imports in warehouses. While tariffs usually mean foreign countries importing goods will have to forgo selling in that country, the tariff is imposed on buyers within the U.S. This means that American buyers would be less likely to purchase from a country that has tariffs imposed on their goods. But almost all U.S. goods sold in retail are manufactured in China, and even with high taxes on those goods, manufacturing is unlikely to occur elsewhere unless major investments in factories outside of China are made, and even then it would take years to fully switch to other facilities.
Aside from that, U.S. consumers will certainly be paying more for goods, as even with companies stockpiling items, the prices will be gauged on market values determined by wherever those items are coming from. This is the result of events over the past 30 years in addition to the recent tariffs, as China became the center of manufacturing and ultimately became intertwined with the U.S. economy. The tension also shows the extent that leadership in both nations can cause tumult in a fragile system. Although companies are preparing for the higher prices, it would be about a year until the full effects on the economy would even be felt according to most economists, aside from a prompt increase on the prices of imports such as electronics.
