ILMA Compoundings - August 2020 - 21
"I think a lot of companies are going to be looking at what can go wrong and broaden their
view of what that might be. Hopefully that
will lead them to decide we need more of our
supply chain local rather than distributed."
Ron Powell, president, MorOil Technologies
he U.S. and China remain embroiled in a global
trade war. Add to that an ongoing pandemic that has
put trade in highly uncertain territory, and matters
become beyond complicated.
"Roughly two years ago, President Donald Trump followed through on his threats and imposed tariffs on Chinese
goods for their alleged unfair trade practices," said Jeff
Leiter, general counsel for ILMA. "The Chinese retaliated
by putting tariffs on our product coming in. Over a few
months, the governments escalated either the amount of the
tariffs or the items that were subject to tariffs. Lubricants
and additives were pulled into the full-blown trade dispute."
In January, China and the U.S. reached a Phase 1 deal,
and both sides agreed to start rolling back tariffs and
expanding trade purchases. However, tensions have flared.
James Eggenschwiler, director of global trade for The
Redstone Group, said the jury is still out on the trade deal
because of concerns over Hong Kong.
China's leaders have announced that they are going to
change some of the procedures in Hong Kong, and the Trump
administration no longer views Hong Kong as autonomous.
Also, in mid-July, the Trump administration ordered an end
to Hong Kong's special status under U.S. law. Of course, U.S.
companies have invested a lot of money in Hong Kong, and
this change to its status could jeopardize those investments.
After signing legislation and the executive order changing
Hong Kong's status, Trump said, "Hong Kong will now be
treated the same as mainland China."
Eggenschwiler said China can't tolerate resuming the trade
war. "They were hurting more than we were," he said. "As
unpleasant as it was to business here, the impact on the Chinese
government was worse, and they were already in a destabilizing
economy. The coronavirus hasn't helped that one bit."
China likely would be more aggressive in Hong Kong if the
leadership wasn't concerned over what that would mean for
the U.S., Eggenschwiler said, adding that he believes the current administration is being careful not to jump too quickly.
There are also other issues going on with China. "They are
expanding their presence on the South China Sea, and the
Chinese Navy is, in some cases, appearing in other territorial
waters of neighboring countries," Eggenschwiler said. "They are
making their presence known, and that is causing some unrest
among some of our allies in the Southwest Asia region."
There are a number of companies, particularly U.S. companies, that have been gradually pulling manufacturing out of
China, in addition to sales representation and global distribution.
Mike Damiani, CEO of Radco Industries Inc., said the
U.S.-China tariff situation forced the company to look for
alternative suppliers, which it has done successfully.
The business that has been leaving China has done so
because of the trade war. "They wanted to get out of the
ILMA Compoundings - August 2020
Table of Contents for the Digital Edition of ILMA Compoundings - August 2020
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