CNY Trade Expert: Local Companies Doing Business With China Will Feel Impact of Trade War

May 13, 2019

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Central New York companies who do business with China are finding themselves caught in the middle of the escalating trade war.  On Friday, the US imposed a 25 percent increase in tariffs on $200 billion in Chinese goods, while Monday, China retaliated by doing much the same on $60 billion worth of US goods. 


Steven King is executive director of the CNY International Business Alliance.  He says many local businesses probably won’t need to adjust prices too much.

"If, for example, you were importing wheel bearings from China and having to pay a 25 percent duty, you would't pass that on as a 25 percent price increase for consumers because the products you're importing from China are just a part of your costs."

Naturally, King says it depends on how much a company’s business is directly related to China.  He believes the tariffs are causing more problems than they’re solving, and are not likely to spur more American production.  In fact, King says, he’s hearing from local manufacturers who could do without the instability while trying to plan ahead more than a few months at a time. 

Steven King has been an exporter for 30 years. He says they're used to the fluctuating costs of imports and exports. But he says, the media rarely focuses on the foreign exchange factor in trade.
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"A company in the region has put on hold a job and production expansion because the trade war is giving them concerns as to whether it is the right thing to do.  So, they're putting that on hold right now."

Tariffs aside, King says exchange rates are often an overlooked concern in the larger trading picture.  Take, for example, our second largest trading partner, Canada. 

"In 2013, the Canadians were buying one American dollar for one Canadian dollar.  The rate today is $1.35  So, basically all the goods Canadians are buying from the US right now are at about a 35 percent higher cost than five years ago."

King says that cost applies to all goods and services, not just certain products.