Running head: us-china trade war 1
us-china trade war 3
US-China Trade War
Confronting Negative Consequences
Many American companies have been affected by the decision by the US president to begin a trade war with China. The companies feared that the biggest blow would come after the tariffs as high as 25% hit 200 billion in goods and materials that most of the businesses buy in bulk. The move seem to be destroying some of the American manufacturers that have managed to survive globalization and thrived. Many of the business managers complain about being thrown into financial unknowns by the move making it impossible to make long term strategic decisions for their businesses.
One such company is that of Jammy that deals with the importation of auto-parts and was started by the father Bradley nearly half a century ago in Texas. The business has employed 11 workers and has a record of 12 million dollars in sales during the last financial year of 2017. The success of the company came after globalization where they forged a partnership with a Chinese firm to supply them with plastic and bent tubular steel for the manufacture of fashion tail lights. The also import other parts for giant lawnmowers and they combine with other thinks in the USA to make the finished products. However, with the rise in the trade tariffs, and the impossibility of changing the manufacturing location, the only option for the business is to abandon the development projects for the company such as the hiring of the logistic and managing employees and the installation of a new computer system. There has also been the consideration of increasing the prices of the products to share the pain with the consumers since the tariffs have increased manufacturing prices by up to 25%.
Profiting from Trade War
On the other hand, some of the companies have been posting increases in their net earnings and this is associated to the trade war between the USA and China. One of the companies that have benefited from the trade war is Archer Daniels Midland Co. which is one of the largest agricultural trading companies in the world. The profit for the company have doubled in the second quarter of the year and beat the expectations of all the analysis, and this has been credited to the war between China and USA. The reason for the increase of the profits is that the Chinese government purchased many products from South America making other buyers to come to the United States. The company had to market their cord, wheat and soybeans to ensure that the new market coming in would select to trade with their organization. The other reason that has also contributed to the increase in the profits for the company have been the reduction in prices of the Soya beans in Chicago, making it cheaper for the company to obtain the raw materials in which they trade in. This has enabled them to increase their profits margins and benefit from the trade war that has skyrocketed between the USA and China.
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