The stock market is tumbling and investors fear for their assets. Large firms are calculating the potential deleterious results of a tariff war on their bottom line. However, a recent Bank of America (BOA) survey showed that 59% of small business owners will not feel any effects from a tariff war.
According to Bank of America’s Spring 2019 Small Business Owner Report, many sectors of the small business economy were polled, and as one can imagine, the other 41% are feeling some of the pain. Sharon Miller, head of small business at Bank of America, says, “Tariffs typically hurt agriculture and wholesale goods more than other businesses.”
According to Fox Business News, small businesses, economists and others are sending stern warnings to the Trump administration that hiking tariffs on Chinese goods will raise costs for U.S. consumers and impair the ability of companies to hire workers or expand operations. Here’s food for thought. Maybe Americans don’t need all the cheap crap that they are buying at Walmart, et al. Whatever happened to the slogan that ran on television every other commercial boasting of “Made in the USA,” on the label? Also, does the thought ever occur to you how China can make these rubber bands and plastic ashtrays that you can’t live without so cheaply?
And then we have something called human rights violations, which are epicentered in China. At 3 cents an hour, of course businesses are going to buy abroad. Conversely, we don’t have a problem paying people $15 an hour to flip hamburgers, but have no understanding of the economics of international slave labor. So, pay $6 for your Big Mac and 13 cents for your ashtray. “Tariffs escalation will be credit negative for US retail and wholesale companies that source finished goods from China and for US companies in the construction, transportation, telecommunications, machinery manufacturing and computers and electronics sectors,” Elena Duggar, assistant managing director at Moody’s Investors Service, said in a statement.
What was once the goose that laid the golden egg to small businesses, as they had discovered a less expensive way to create their goods, China could now become their undoing. Look, nobody wants to see a small business go under because of tariffs, but as most entrepreneurs know, they will either have to adapt or die. Those that have seen the writing on the wall are looking elsewhere to source their products and manufacturing. Vietnam has become the new China of the Far East.
Vietnam is on pace for around 5% GDP growth this year. Another tangential sourcing spot, which is highlighted more for immigrants swimming across the Rio Grande than manufacturing, is Mexico. Mexico is capitalizing on China’s misfortune through cheap wages of its own. Mexico’s manufacturing resurgence of late has been a boon for U.S. industrial giants. What comes around, goes around.
Product sourcing is coming back to the good old US of A. What better a country to take jobs from China than the one that companies originally fled from to China, the United States? So listen up entrepreneurs, you have options, you now need to go out and get them.