German Cars and American Steak: Here Are the First Trade War Victims

China’s retaliatory tariffs on U.S. goods struck just as one of its biggest meat importers was rushing a shipment from California through Shanghai customs. Now Suzhou Huadong Foods is saddled with a stack of unaffordable American steak.

German Cars and American Steak: Here Are the First Trade War Victims

Only three containers of frozen produce including prime rib and pork loin came through before the new levy slapped as much as 500,000 yuan ($75,000) on each of the remaining half-dozen crates, according to Gong Peng, the importer’s general manager.

“We have no choice. We have to eat the costs,” Gong said in an interview. “We are guaranteed to dramatically lower our purchases of meat from American ranchers.”

Triggering what China calls “the largest trade war in economic history,” the U.S. on July 6 imposed a 25-percent duty on $34bn of Chinese imports. Beijing immediately responded with tariffs on U.S. soybeans, meat and vehicles. Suzhou Huadong, which supplies supermarkets such as Walmart’s Sam’s Club in China, is just one of the early victims. For automobiles and whiskey makers to companies along the complex global supply chain that defines modern manufacturing, it is a moment of reckoning as they grapple with higher costs and whiplashes from some of the earlier business decisions.

The ability of tariff-hit companies to weather the conflict may partly depend on the amount of stock they managed to import before higher levies kicked in. But once those supplies run down, they’ll have to absorb the tariffs or pass them on to customers.

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Only three containers of frozen produce including prime rib and pork loin came through before the new levy slapped as much as 500,000 yuan ($75,000) on each of the remaining half-dozen crates, according to Gong Peng, the importer’s general manager.

“We have no choice. We have to eat the costs,” Gong said in an interview. “We are guaranteed to dramatically lower our purchases of meat from American ranchers.”

Triggering what China calls “the largest trade war in economic history,” the U.S. on July 6 imposed a 25-percent duty on $34bn of Chinese imports. Beijing immediately responded with tariffs on U.S. soybeans, meat and vehicles. Suzhou Huadong, which supplies supermarkets such as Walmart’s Sam’s Club in China, is just one of the early victims. For automobiles and whiskey makers to companies along the complex global supply chain that defines modern manufacturing, it is a moment of reckoning as they grapple with higher costs and whiplashes from some of the earlier business decisions.

The ability of tariff-hit companies to weather the conflict may partly depend on the amount of stock they managed to import before higher levies kicked in. But once those supplies run down, they’ll have to absorb the tariffs or pass them on to customers.

Read full article

German Cars and American Steak: Here Are the First Trade War Victims