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The European Union, Canada, China and Mexico have all implemented retaliatory tariffs on American goods due to the US tariffs applied this year by the Trump Administration on Chinese goods. American electronics manufacturers are especially vulnerable to turmoil in their supply chains due to rare earth minerals and alloys used in many products produced in the US, or overseas. Such items include: computer memory, DVDs, rechargeable batteries, mobile phones, catalytic converts, magnets and lighting. Although there has been some remedial progress made between the US, Canada, and Mexico recently, it’s expected by economists and trade experts that expected affects in the US are:

  • Tariffs to date increase the cost of raw materials and in some cases disrupt supply chains. Often China is the only source of some goods. A shortage of raw materials will likely result in the US.
  • Increases in costs will be passed on to consumers. In the US, this means higher prices for locally assembled goods due to tariffs on B2B raw materials and components, plus tariffs on consumer finished goods. In China, Mexico, Canada and EU members, prices will increase on food and beverage items.
  • Durable goods sales in the US will be unaffected in the short term, unless merchants are buying and selling goods made with raw materials and components, such as steel, which have been slapped with tariffs. Online companies who sell goods made with steel or aluminum, will have to raise prices or suffer lower margins to maintain current pricing.
  • Any further escalation in tariffs resulting in more goods being taxed will raise overall consumer prices and dampen ecommerce and more-traditional brick and mortar sales.

To discuss how Optima can assist you with your sourcing decisions and minimize turmoil and tariffs, please let us know a good time to schedule a call, or send your email to optima@optimatech.net.

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