With the threat of tariffs on Chinese goods looming, American businesses are scrambling to stockpile inventory, reevaluate sourcing, and brace for potential price hikes as they navigate a precarious trade environment under a second Trump administration, The Wall Street Journal reported.
American businesses are taking preemptive measures to shield themselves from the financial fallout of potential tariffs on Chinese imports promised by President-elect Donald Trump during his 2024 campaign. Trump has proposed raising tariffs on Chinese goods to 60%, forcing companies to stockpile goods, adjust pricing strategies, and explore alternative suppliers.
Jason Junod, co-founder of Bare Botanics, a skincare company based in Madison, Wisconsin, recently spent $50,000 to purchase a year's supply of body brushes and exfoliating gloves from China.
"The biggest consideration is: Do we stay in China?" Junod said.
The strategy of front-loading imports mirrors a playbook used during Trump's initial trade war in 2018.
Businesses accelerated imports ahead of tariff deadlines, temporarily inflating trade deficits. In October 2023, Chinese exports surged nearly 13% compared to the previous year, likely fueled by American companies stockpiling in anticipation of higher tariffs.
China remains the largest exporter of goods globally, with the U.S. as its top buyer. In 2023, Chinese goods accounted for roughly 14% of U.S. imports, down from 22% in 2017.
However, the U.S. trade deficit with China remains significant, driven by robust consumer demand and limited domestic alternatives.
Some businesses, like Lucidity Lights in Boston, are accelerating efforts to shift production out of China. CEO Ryan Bursky began sourcing from Cambodia in 2023 and plans to relocate about half of his company's production there by 2025.
"It's a better use of resources to invest in supply-chain diversification rather than stockpiling," Bursky said, noting that while Cambodia's manufacturing sector is still growing, the quality of its products meets expectations.
Others, like San Francisco-based Stone Fleury, a natural stone and porcelain wholesaler, depend heavily on Chinese suppliers. Co-founder Leah Dark-Fleury recently arranged a $100,000 bulk order from China to get ahead of tariff increases.
"I wish that I could buy enough to get us through the four years," she said.
Despite the diversification efforts, experts believe China will retain its dominance in global manufacturing. Joe Jurken of the ABC Group, which assists U.S. companies with Asian supply chains, attributes this to China's developed infrastructure and competitive pricing.
"China will never be replaced," he said. "Other markets are an alternative."
Meanwhile, consumers could bear the brunt of tariff-related price increases. Importing businesses typically pay tariffs, which often pass on costs to buyers.
For companies like Fine Fit Sisters, a Charlotte, North Carolina-based retailer of body oils, the prospect of raising prices could undermine sales.
"People like cheap things," owner Toni Norton said, noting that higher tariffs might force her to discontinue popular products.
According to a 2024 Bain & Company survey, 69% of business executives plan to reduce their reliance on China, up from 55% in 2022.