The first link in this blog is to an AGMA article on the issues of trade tariffs on gear manufacturers’ supply chains. This is in reaction to President Trump announcing his intention to raise 10% additional tariffs on imports from China to 20%.
Currently, 25% tariffs are due to be imposed by the US on imports from Canada and Mexico however, due to the fluidity of the situation this could change.
Naturally, gear manufacturers in the US are wondering what effects will this have on their supply chains and their ability to source at competitive prices.
These concerns are addressed in the AGMA link below – where questions on the topic can be asked.
However, this is written from the perspective of the US – so what are the implications for Australia?
The impact on Australian Manufacturing is tackled in our second link to an aumanufacturing.com page by Julie Harrison.
The article acknowledges that both the US and Australia have tariffs on many goods and have a Free Trade Agreement in place – however, there is a need to look at the broader ramifications of what President Trump is proposing.
Steel and aluminium are key components of Australian manufacturing. The danger is that US tariffs could accelerate China’s steel dumping programme with Australia being the target.
Reciprocity – so the US charges the same rates as the given country. If you charge X% the US will charge the same.
A relatively low upturn in import tariffs could be felt in the US supply chain and passed on to customers in Australia – who as a relatively small economy rely on a lot of inputs.
The ripple effect of US tariffs could be that other countries effected could dump into open markets like Australia.
Shipping costs could rise if the President insists on new governance arrangements for the Panama Canal – there is the potential uncertainty with the possibility of insurers and trade financiers putting a risk premium to the Panama Canal. In the short-term Australian manufacturers could pay the price for a perceived disruption.
A Chinese industrial sector desperate to grow markets could look to give free-trade nations lower prices and higher volumes to the detriment of Australian manufacturers.
How could Australia protect itself?
Look to source new supply chains or bring otherwise imported goods onshore. Australia could look at tariff structures, introduce new anti-dumping measures or lobby the WTO to tighten rules on member nations. For a fuller view and analysis – visit the links below.