Tariff Reduction: Trump Signals Tariffs Reduction: Is it Time to Rebuild China Global Sourcing Relationships?
In a significant shift in U.S.-China trade relations, President Donald Trump has recently hinted at a potential reduction in the current 145% tariff rate on Chinese imports. This has raised critical questions for global sourcing and supply chains: Should companies reconsider their China sourcing strategy and protect relationships with Chinese suppliers?
Companies in the US have been reacting to the tariff policy roll out by cancelling orders and holding any new ones with Chinese suppliers. Global sourcing teams have been focusing all their efforts on moving supply chains to new lower tariff markets like India, Turkey and some of the wider Asian sourcing markets. Whilst the new tariff regime currently makes them look like attractive potential partners the ability to move supply market rapidly is dependent upon manufacturing complexity, investment costs and skills in new markets. Making the choice to manufacture in low tariff market or reinvest in home market capacity long term and high-cost investments for many companies.
Global Sourcing from China Post-Tariffs: A New Strategy?
With a softening of dialogue towards China tariff reductions, should you rebuild China global sourcing relationships?
The Inevitable Impact of Tariffs Policy on Global Sourcing
The current instability in tariff policy is not creating the stable backdrop and investment incentives to enable corporate investment planning. However, for global sourcing strategies it is important to create agility to navigate uncertainty.
Recognizing that the dramatic spike in tariffs triggered market turmoil and Chinese retaliation, Trump has indicated that the U.S. will seek a more balanced approach, reducing tariffs to more sustainable levels while maintaining leverage in negotiations.
What Does This Mean for Companies with China Suppliers?
Businesses are this morning facing into re-evaluating their China sourcing strategies. As Tariff policy continues to change and evolve, the need to protect and nurture Chinese factory partner relationships could be crucial to hedging long term supply and margin risk.
For ET2C our experience shows that for companies with heavily invested or specialized manufacturing, a rapid movement of supply and manufacturing capability away from China was never an option to be contemplated. Investment costs, specialised manufacturing capabilities and joint investments ensured there was no quick and easy ways to move supply to a new country. These companies could be the early beneficiaries of a reduction in China tariffs to more manageable levels.
Whilst cost impacts will still have to be mitigated, supply can be secured whilst working through a margin defence plan encompassing:
- Value engineering
- Range rationalisation
- Portfolio management
- Supplier negotiations
For companies who rapidly disengaged and cancelled orders with suppliers, the softening of tone could mark the need to rebuild partnerships with China suppliers and build a joint growth plan as part of a more diversified supplier portfolio.
1. Should You Rebuild or Protect China Supplier Relationships?
With tariffs potentially set to decrease to more manageable levels, maintaining strong ties with Chinese suppliers could once again offer competitive advantages. The talk of moving to US – China tariffs are to manageable levels could re-set many relationships and make trade feasible if margin increases can be accommodated. This is where a leading global sourcing company can create advantage.
2. Is Diversification Still Necessary?
The experience of the past several years—and the lessons of the COVID-19 pandemic—have underscored the value of supply chain resilience. Leading supply chain advisors recommend that companies continue to diversify their supplier base, even as tariffs fall, to hedge against unforeseen events. The decision to diversify supply partners in a wider global sourcing strategy is driven by the cost inclusive of tariffs, supplier capability and capacity development.
The move away from single source supply chains was begun during Covid but will be completed as a potential unintended consequence of the new US tariff policy. As a global sourcing company we have learned that Agility is crucial.
ET2C International global sourcing experts
ET2C International is a British owned global sourcing company with over 23 year’s experience working with our international clients to make their sourcing simpler. Creating and executing strategic sourcing plans, quality and compliance, sourcing consultancy and our unique buying office model.
Our 200 colleagues are based in 7 global offices in key Asian and European sourcing markets:
- India
- China
- Vietnam
- Turkey
Giving your rapid access and dep insight into sourcing market and manufacturing partners. To learn more about how we help clients to rapidly build margin, management risk and create simplicity contact@et2cint.com to speak to one of your colleagues.
The New Normal: Flexibility, Resilience, and Collaboration in Global Sourcing
The latest signals from Washington suggest that the era of “maximum tariffs” may be ending, but unpredictability remains the norm. Companies that balance renewed engagement with China and a broader, more resilient supplier network will be best positioned to thrive and management supply side risk.
As part of a wider tariff mitigation plan, the prudent path forward is not a return to pre-tariff complacency, but a new normal defined by flexibility, vigilance, and strategic collaboration.
Learn More with ET2C Contact us at contact@et2cint.com and speak to one of your colleagues, who has deep expertise in many key areas.
