With 90-Day Tariff Truce, US Companies Resume Operations at Chinese Factories

Resumption of Shipments... Companies Rush to Secure Chinese Inventory

The United States and China have agreed to significantly lower the high tariffs they had imposed on each other for a period of 90 days, prompting some American companies to resume production in China and begin shipping products.

EPA Yonhap News

According to the New York Times (NYT) and other sources on May 12 (local time), the American toy company Basic Fun had suspended all shipments from China for several weeks and stored products at local factories, but immediately resumed shipping on this day.

Jay Foreman, CEO of Basic Fun, said he woke up early in the morning to call partner companies and request product shipments. He stated, "We started moving everything. I have to call the Chinese shipping company to schedule pickups from the factory and book cargo ships."

Monty Sharma, CEO of massage device manufacturer Therabody, said that production had resumed at their Chinese factory. He added, "Even though costs have increased by about 30 percent, I have never been this happy in my 40 years in this business."

David Chitayat, CEO of contract manufacturer Genimex, predicted that, due to the latest US-China trade agreement, American companies would try to quickly bring products that had been stored in Chinese factories into the United States. He explained that companies might begin stockpiling inventory to prepare for uncertainties such as tariffs returning to previous levels or the possibility of negotiations breaking down after the 90-day period.

The National Retail Federation (NRF) also noted that retailers might feel short-term relief and could begin stockpiling inventory ahead of the back-to-school season or year-end holidays. However, for companies that had previously halted factory operations, it will be crucial to see whether they can complete production and shipping from Chinese factories within the 90-day window.

Outdoor equipment company Tarptent is currently looking into whether it can resume orders with its Chinese factory following the US-China agreement, but noted that it would be difficult to complete processes such as sending American-made fabric to China and manufacturing tents within 90 days.

Some have raised concerns that if demand for shipping Chinese products to the United States increases rapidly in a short period, shipping costs could rise or shipments could be delayed. In response, Gene Seroka, executive director of the Port of Los Angeles, a major US trade port, said that the likelihood of a surge in import volume within a few weeks is low, adding, "Ninety days is not a long period in our industry."