CNBC Warns:
"Tariffs Could Cause Irreversible Damage to the US Economy"
Donald Trump's tariff policy, which was supposed to protect American companies, is instead increasing cost burdens on domestic businesses, with particularly severe damage occurring to small and medium-sized enterprises (SMEs), a warning has been issued.
On the 13th (local time), US CNBC reported that the 145% tariff imposed on Chinese imports could cause irreversible damage to the overall US economy.
Trade industry experts pointed out that as order cancellations of Chinese-origin cargo have become routine amid the US-China trade war, American companies are suffering significant blows. Alan Murphy, CEO of Sea Intelligence, a global supply chain market analysis and advisory service company, said, "Recently, US importers have completely stopped ordering Chinese furniture. The same applies to toys, clothing, footwear, and sporting goods." Brian Bock, Chief Commercial Officer (CCO) of logistics company SEKO Logistics, also said, "There was a similar situation in Southeast Asian logistics, but recovery was seen after a 90-day grace period. However, cancellations of Chinese products are still ongoing."
Concerns have arisen that if the trade halt between the US and China continues, companies will face sales declines due to inventory shortages within the US. Steven Lamar, CEO of the American Apparel & Footwear Association (AAFA), said, "We are witnessing the most severe supply chain disruption since COVID-19. Excessively high tariffs on Chinese imports have forced many companies to cancel orders. Moreover, because tariff policies keep fluctuating, logistics cannot know exactly how much tariff will be applied until goods arrive at the port, making it impossible to predict."
Lamar explained that the high tariff rate of 145% is expected to cause damage to American SMEs. He said, "Unpayable invoices are arising due to the high tariffs. This burden is beyond what SMEs can handle. Many companies, including SMEs, have not found alternative suppliers, so sudden order cancellations will lead to immediate sales losses and product shortages." He added, "Trade war measures on Chinese imports should be temporarily suspended. Otherwise, the damage will become irreversible."
Some companies are also considering relocating production bases to countries like Vietnam or India to avoid high tariffs. Murphy, CEO of Sea Intelligence, said, "High-tech products such as electronics, machinery, and pharmaceuticals cannot easily shift production locations. Building advanced manufacturing facilities takes a long time and requires enormous capital."
He continued, "If the Trump administration's tariff policy is merely a tool for trade negotiations, no one will make large-scale investments for domestic production in the US. If the Trump administration truly aims to rebuild American industry, it must clarify a long-term plan for tariffs. Changing tariff policies repeatedly only increases uncertainty," he pointed out.
Additionally, the number of sea and air cargo shipments left unpaid or delayed in customs is increasing. According to New York port regulations, cargo left unattended for more than 30 days is considered 'abandoned cargo' and subject to auction or disposal, CNBC reported.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
