Companies struggle to work around US-China trade war

Companies attempting to work around steep US-China tariffs have caused logistics bottlenecks due to poor infrastructure along alternative routes, according to the Wall Street Journal.

This is despite President Donald Trump’s breezy suggestion that US companies affected by the tariffs would simply do business with, or route their goods via, other Southeast Asian countries instead.

Logistics infrastructure in countries such as Vietnam, Thailand, the Philippines and Cambodia is much less developed than in China, leading operators to contend with port congestion, a lack of deep-water facilities for large vessels, and a scarcity of rail lines and decent roads, all of which have upped shipping costs and lengthened delivery schedules.

Some companies have been trying to shift manufacturing from China to alternative locations, but find that factory capacity likewise does not compare. Existing shipping routes also make sourcing from other countries slower and more expensive for many businesses.

The US has now imposed tariffs of 25% on $200 billion worth of Chinese goods. China is set to return the favour with $60 billion worth of tariffs from 1st June.

Source: The Wall Street Journal