Parts Suppliers Enduring Disruption from Tariffs
Oct. 9, 2018—According to a report from the American Journal of Transportation, several auto parts suppliers are already experiencing disruption from tariffs.
Auto parts, of course, represent a large portion of the $200 billion worth of Chinese goods that are now under tariff. In September, President Donald Trump’s administration began to impose Section 301 tariffs on billions of dollars of Chinese-sourced auto parts, an initial 10 percent duty that will increase to 25 percent on Jan. 1, 2019. That action impacts thousands of companies, threatens many American jobs, and could disrupt the global supply chain that supports the auto industry.
“Probably the hugest uncertainty is how to build your supply chain, because no one really knows how this will play out in the future when these tariffs will begin or end,” noted Aaron Lowe, an executive with the Auto Care Association.
Last year, the U.S. imported almost $13 billion worth of Chinese auto parts, though not all are subject to new duties. The lead time for a Chinese manufacturer to produce a particular part typically takes anywhere from 90-120 days from receipt. Plus, it takes roughly 2 weeks for the goods to cross the Pacific, plus several days for transit from a terminal to a warehouse or facility.
What’s more, a steep rise in container shipping rates across the Pacific has already negatively impacted auto parts importers.
To read the full ajot.com report, click here.