The prices of Chinese goods are too competitive to resist

China can withstand any new tariffs, even if Mr. Trump intends to impose them if he wins a second term, because Chinese goods are priced so competitively that they are irresistible. That was the prevailing view at the Canton Fair, which opened this month. Many buyers and sellers at the trade event shrugged off the risk of an escalating trade war.

 

"My customers tell me that even a 50 per cent tariff will not drive them away." Says Jack King, who sells fixed goods tools and truck parts. He says about half of his orders come from Americans, who can sell the products they buy from him for four times the price.

 

In an election year in the United States, tensions are rising between some trading partners and China. But traders at the Canton Fair say the world needs Chinese goods anyway. They are considering workarounds to circumvent the tariffs. Even buyers who are researching supply chain alternatives say they expect China to remain a top-tier source because other countries' products cannot match China's in terms of quality or cost.

 

Jackson, a buyer for a furniture company in Bosnia and Herzegovina, says he can get "very, very similar" products in China for half the price of European manufacturers. He said tariffs might cause some shock, "but China is a big country." They can also sell their products to other countries."

 

For Mr. Studante, an auto parts importer from California, American consumers are bearing the brunt of the tariffs on Chinese goods. When Trump imposed the tax, American retailers refused to pay higher prices, instead demanding slightly cheaper versions from Chinese producers. "At the end of the day, who pays? The consumer. You either give up something in terms of product quality or you pay more for the same product." Student described one way he had found to offset the tariffs, by switching to what he called "FOB." That means his American customers will bear the logistics and warehousing costs, while the selling prices on which the tariffs are based have fallen. "There are plenty of workarounds," he says.

 

Lulandala, the owner of a machinery trading company in Tanzania, is visiting China for the first time and is excited to negotiate directly with Chinese manufacturers. What he found at the Canton Fair was low prices, which prompted him to expand his business ambitions and he is now considering opening a factory in his hometown to make bricks using a Chinese machine that costs about $8,000. He is confident he can recoup his costs within three months. "If I had come here a few years earlier, I might have been more successful in business by now," he says.

 

(From: Global Times)