US Companies Adopt an Original Way to Prevent the Worst from Trade War

US Companies Adopt an Original Way to Prevent the Worst from Trade War


The companies in America may have found an original and inventive way to pass along the tariffs imposed on Chinese goods by President Donald Trump. UBS Wealth Management has a global chief economist named Paul Donovan. As per a note from Donovan, certain US firms are most probably finding a channel through which they are able to guide the imports from China by way of some other foreign subsidies, for instance in Canada. Then ultimately they manage to once again import them into America. This, in turn, helps the firms to keep importing from China but do not need to suffer the burden of tariffs. Donovan goes on to say that this particular manner of passing along the tariffs is extremely effective for all those multinational organizations, which are based in America. This is due to the fact that these firms tend to have their offices as well as the manufacturing units all over the world.

Still, it is quite hard to make out as these types of moves are highly unlikely to show up in the official data. This is because the whole process of production is not changing the location but only a part of it. Close to 40% of all global trade is carried out by multinational companies. These companies are known to have factories in more than one nation but it is quite impossible to spot this fact in the data. So, it is evident that there is no full proof evidence, which would act as support for the theory of Donovan but there are clear-cut hints that it is indeed taking place. He even said that there was quite a substantial increase in exports of Chinese electrical switches to Canada after the US taxes.

The trading patterns after the imposition of trade taxes in the month of July suggest a genuine hike. As of now, the US and China have gone on to trade one-on-one tariffs on goods, with the total up to $US360 billion. Here America has acted as the aggressor with Donald Trump going on to issue several threats of placing tariffs on all the US imports worth close to $US500 billion from China.

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