The same day Sloven met his lawyer, his bosses in Florida announced 2018 results that reflected the effects of the trade war. Net revenues came in at $12.8 million, down from $36.8 million in 2017. Net losses were $1 million, a swing from a $3.1 million profit.
“Capstone faced challenges in 2018 unlike any in its history,” chief financial officer Gerry McClinton said.
But of course China is paying all the tariffs...
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The same day Sloven met his lawyer, his bosses in Florida announced 2018 results that reflected the effects of the trade war. Net revenues came in at $12.8 million, down from $36.8 million in 2017. Net losses were $1 million, a swing from a $3.1 million profit.
“Capstone faced challenges in 2018 unlike any in its history,” chief financial officer Gerry McClinton said.
But of course China is paying all the tariffs...
It would be interesting to learn how Mr. Sloven votes.
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Basic Fun, the company behind Lincoln Logs, mini retro arcade games and other toys, plans to keep its production in China, CEO Jay Foreman told CNBC on Friday.
Foreman suggested that President Donald Trump is too unpredictable for the company to just pick up and leave China, where Florida-based Basic Fun makes about 90% of its products.
“As soon as that happens and we start to move, he’s going to put a target on somebody else’s back, and where do we go from there?” Foreman said on “Squawk on the Street,” questioning Trump’s tweet a week ago that “hereby” ordered American companies to “immediately start looking for an alternative to China.”
“Without a rationalization in this trade policy, there is really no way to plan,” added Foreman.
Executives at Columbia Sportswear in Portland, Ore., were in a high-level meeting last Friday to wrap up their response to the Trump administration’s latest round of tariffs on Chinese imports when the president took to Twitter.
American companies, President Trump posted not long after Columbia’s session had started, were “hereby ordered to immediately start looking for an alternative to China.” Hours later, Mr. Trump said he was raising tariffs even higher.
The plan under discussion by Columbia, which makes a variety of outdoor goods in China, like jackets and hiking shoes, had taken thousands of hours to draft, and it included shifting product lines to other countries and raising prices on others when the tariffs took effect in September.
“We had a solution, where we’re going to raise prices, where we’re going to move stuff,” said Tim Boyle, Columbia’s chief executive, who had called into the meeting from a vacation in Canada. “And then, an hour later, we learn he’s going to raise tariffs even further. It’s insane.”
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“I considered staying” in Canada, Mr. Boyle joked.
What other companies are doing (tldr: Mostly scrambling to react):
Originally posted by Axtremus: The preferred answer is to move to the USA homeland.
That was sold as the goal but it's not working. If anything manufacturers are finding even cheaper places to manufacture their products.
I was surprised to see Ethiopia mentioned in one of the articles as a place to move manufacturing. Looks like the Belt and Road program is starting to pay off.
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Ethiopia's Eastern Industrial Zone is a manufacturing hub outside Addis Ababa that was built by China and occupied by factories of Chinese manufacturers.[52] According to Chinese media and the vice director of the industrial zone, there were 83 companies resident within the zone, of which 56 had started production.[53] However, a study in Geoforum noted that the EIZ has yet to serve as a catalyst for Ethiopia's overall economic development due to many factors including poor infrastructure outside the zone. Discrepancies between the two countries‘ industries also mean that Ethiopia cannot benefit from direct technological transfer and innovation.[54]
From October 2011 to February 2012, Chinese companies were contracted to supersede the century-old Ethio-Djibouti Railways by constructing a new electric standard gauge Addis Ababa–Djibouti Railway. The new railway line, stretching more than 750 kilometres (470 mi) and travelling at 120 km/h (75 mph), shortens the journey time between Addis Ababa and Dijbouti from three days to about 12 hours.[55] The first freight service began in November 2015 and passenger service followed in October 2016.[56] On China–Ethiopia cooperation on international affairs, China's Foreign Minister Wang Yi said that China and Ethiopia are both developing countries, and both countries are faced with a complicated international environment. He stated that the partnership will be a model at the forefront of developing China–Africa relations.[57]
Are goods manufactured in Ethiopia and sold by Chinese firms subject to tariffs?
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Good question and one that I haven't found an answer to yet. But this piece that I stumbled upon during my search so far was a pretty interesting look at what the furniture industry is doing.
I'm sure the Chinese are trying to find workarounds just like American companies are. And you gotta wonder if in some cases they might not be collaborating on creative solutions...
-------------------------------- When the world wearies and society ceases to satisfy, there is always the garden - Minnie Aumônier
Posts: 38223 | Location: Somewhere in the middle | Registered: 19 January 2010
Pisani provided several test cases to delineate between legitimate re-engineering and tariff evasion. Here’s an example where tariff engineering ultimately was rejected by the courts. An importer brought passenger min-vans subject to a 2.5% duty to the United States. After release from Customs, the importer removed the passenger seat rows in order to sell the vehicles as cargo vans, which are subject to a 25% duty.
After an initial Customs Court ruling in the importer’s favor, a government appeal in federal Appeals Court determined the vehicles were indeed cargo vans. While the appellate court refused to come out and say the importer engaged in evasion, it did say that the company did not do enough to support a valid tariff engineering claim.
Thus we had Subaru pickups with seats in the bed ("Brats" - remember those?) and Toyota pickups shipped here as cab-and-chassis to avoid the tax. Truck beds were installed in Long Beach near the port and were a different style than the beds on trucks shipped wholly assembled from Japan.
For a while you could order your truck either way - "Long Beach bed" or "Japanese bed". I'm not sure what made that change.
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