It is a scientifically established fact: Rats do not create or innovate. They are "rodents" (from Latin "rodere", to chew, to nibble) because they live on the garbage created by more refined species. True to form, that is what Han Chinese excel at: - copying, stealing, defiling and then messing and corrupting with their filth all that lies within their sight! Well, at long last, but not before time, the civilised world is reacting! We will suffer Han Chinese Rats no more! Hooray!
PORTLAND,
Ore. — When the Trump administration first imposed tariffs on $34 billion in Chinese imports
in July, Andy LaFrazia figured it was just another curveball for his company.
“Everyone
was saying: ‘Oh, it’s a negotiating tactic. It won’t last long,’” Mr. LaFrazia
recalled.
But
nearly a year later, the trade war shows no sign of cooling off. So ControlTek,
the electronics manufacturer that Mr. LaFrazia runs near Portland, is taking
steps to protect itself, a strategic shift that has been repeated in boardrooms
and executive suites around the world in recent weeks.
ControlTek
is rewriting contract language to make it easier to pass the cost of tariffs on
to its customers. It is shifting supply chains out of China where possible, and
redesigning products to avoid Chinese components where it isn’t. And as a tiny
player in an enormous global industry, it is discovering that there is only so
much it can do.
“We’re
very much at the end of the whip getting thrown around,” Mr. LaFrazia said.
Despite dire warnings
from economists, President Trump’s trade war has so far done little to derail
the decade-long recovery from the Great Recession. Economic growth has remained
strong, and the unemployment rate last month hit a 50-year low.
But
evidence is mounting that the conflict has taken an economic toll. The Commerce
Department said Thursday that trade — both imports and exports — slumped in
April, and data released earlier this week showed a sharp slowdown in
manufacturing, amplifying a recent trend. The bond market in recent days has
been sending signals that the trade war could be a
threat to growth in the United States and globally. The impact could deepen if
Mr. Trump follows through on his promise, made Thursday, to impose new tariffs on imports from Mexico.
And as the conflict drags
on, there are signs it is beginning to reshape the global economy in more
fundamental ways.
“There’s definitely lasting damage that has
been done,” said Mary Lovely, a Syracuse University economist and senior fellow
at the Peterson Institute for International Economics in Washington. “It’s not
going to mean the end of the world tomorrow, but it’s death by a thousand cuts.
How competitive is America going to be in 10 or 15 years?”
Tariffs have not yet
compelled businesses to return large-scale production to the United States,
where labor and other costs tend to be much higher than in China and other
overseas manufacturing hubs.
But
trade tensions are accelerating a corporate trend of shifting supply chains away from China. In a recent
survey of more than 200 corporate executives by the consulting firm Bain, 42
percent said they expected to get materials from a different region in the next
year, and 25 percent said they were redirecting investments out of China. More
companies are likely to follow suit in coming weeks after the Trump
administration moved to limit business with Huawei, the Chinese telecommunications giant, which the
White House sees as a security threat.
Many
companies were initially reluctant to abandon longstanding supplier
relationships over a trade dispute that could be over in months, choosing
instead to absorb the tariffs or find ways to share the costs with suppliers
and customers. Now some are re-evaluating those decisions.
GoPro,
the camera maker, said this month that it was shifting some production from
China to Mexico. Universal Electronics, a manufacturer of remote controls,
announced a similar move late last year. And Varex Imaging, a Utah-based maker
of X-ray equipment, said this month that it was working to “redirect our supply
chain away from China” in response to the tariffs.
“Most
companies took a wait-and-see attitude” at first, said Pete Guarraia, who leads
Bain’s supply chain practice. “That was absolutely the mind-set. Now it’s: ‘I
can’t wait any longer. I have to take some action.’”
Electronics manufacturers
could be among the first to feel the full brunt of the trade war. The industry
is perhaps uniquely global: Chips made in Oregon or Texas are shipped to a
plant in Mexico to be attached to circuit boards made in China alongside
capacitors made in Vietnam. It is not unheard-of for a product or its
components to cross the Pacific three or even four times before showing up on
retail shelves.
The crackdown on Huawei
in recent weeks has opened a new front to the trade war. Huawei buys chips and other components from American
manufacturers, and analysts warn that the fight could quickly spread to other
companies.
American
companies sold more than $200 billion in computers and electronic goods to
foreign buyers last year, including $18 billion to China. And while that was a
small part of the United States’ $2.5 trillion in total exports last year, the
broader tech sector has accounted for an outsize share of economic growth in
recent years.
Anything
that disrupts the global supply chains the industry relies on could threaten
American economic growth, said Torsten Slok, chief economist for Deutsche Bank.
Semiconductor sales, he said, have proved to be a reliable indicator of the
direction of the broader economy — and sales have been falling this year.
“We
will find out soon if the economy was strong enough to withstand this,” Mr.
Slok said.
If the
electronics industry sneezes, few places will catch a cold as quickly as
Portland. The industry employs close to 40,000 people in Oregon, including
20,000 at Intel, the state’s largest private employer. Oregon exported $2.7
billion in electronics goods to China last year, more than any state other than
California — a total that doesn’t include companies, like ControlTek, that are
just across the Columbia River in Washington State.
Founded
in 1971, ControlTek has weathered the rise of Japan and then China. Today, the
company and its 140 employees don’t try to compete directly with the
high-volume factories in China.
Instead,
ControlTek, like American manufacturers in other industries, has survived by
carving out a niche based on quality and service. Its plant in Vancouver,
Wash., has state-of-the-art machines that place components — integrated
circuits, capacitors, resistors and other devices, some barely big enough to
see with the naked eye — onto circuit boards destined for medical devices,
aircraft and even pitching machines. But it also has employees hand-soldering
parts beneath high-powered magnifying glasses, the kind of personalized
attention that can look like an anachronism on today’s highly automated factory
floors.
When the first round of
tariffs went into effect last year, ControlTek executives had no idea how they
would be affected, or even how to find out. The software for tracking inventory
showed the company’s suppliers, but not where those suppliers got their
material.
“I didn’t even know that was something you
could find out,” Mr. LaFrazia said.
It was also unclear which
products were subject to tariffs. Mr. LaFrazia, a 54-year-old Air Force
veteran, recalled spending hours poring over an online list of tariff codes to figure
out which applied to his parts. When he called the manufacturers, they often
didn’t know where they fell in the government’s taxonomy of tradable goods.
Even the government’s experts can get confused — ControlTek recently had a
shipment of parts delayed for 12 days because customs officials thought they
contained aluminum that was subject to tariffs. (They didn’t.)
Over
time, ControlTek has learned to navigate the system. Suppliers are sourcing
components from Vietnam, Malaysia and other countries where possible, and
ControlTek has begun factoring the tariffs into its product designs.
“We’ll
design China out,” Mr. LaFrazia said.
The
longer the trade war goes on, the more companies will have to make such
decisions. Thomas Isaac, president and chief executive of Allied Technologies
International, an Oregon manufacturer of parts for the telecommunications and
aviation industries, said he had all but given up on selling to China. Sales
there have slowed “almost to negligible” since tariffs took effect, he said.
But Mr. Isaac has seen more business from customers looking to keep their
suppliers closer to home.
Mr.
Isaac spent more than a decade at General Electric before acquiring Allied
Technologies five year ago, and he said he remembered the enthusiasm for
globe-spanning supply chains. Now that optimism is fading.
“The
global supply chain sounded good for the last 20 years, but you’re already
seeing companies pulling back and saying, ‘Let’s stay more local,’” he said.
While
companies may be rethinking their supply chains, Mr. Isaac said he did not
expect to see production shift back to the United States in meaningful volumes,
the stated goal of Mr. Trump’s policies. So far, the data backs him up. Imports
from China have fallen precipitously since the trade war began, both in
electronics goods and over all. But that decline has been offset by increased
imports from other countries. The nation’s trade deficit has been largely
unchanged.
At
ControlTek, tariffs have eaten into profit margins, although business as a
whole hasn’t suffered. On one level, the trade war is no different from health
care costs, labor issues or any of the other challenges that businesses
encounter. But Stacey Smith, ControlTek’s vice president for human resources
and marketing, said that for an American manufacturer, the tariffs were
particularly hard to stomach.
“The tariffs are
different because it’s your own government,” she said. “I understand the
negotiating tactics. But it really is quite painful to be one of the pawns.”
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