https://www.bbc.

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US-China trade war: 'We're all paying for this'

By Virginia Harrison, BBC News
1 August 2019

Case Study 1
“I've been building my business, and growing it year after year, and then this happened,” said
Sherrill Mosee, who belongs to the group of traders who've been caught in the crossfire of
the US and China trade conflict.

Sherrill Mosee is the founder of a company called Minkee Blue, which mainly produces handbag
and backpack, has its head office and control centre in Philadelphia but manufactures its
products in China (due to cheap labor) and then imports them to the United States.
Her company is one of those suffering from the impact of the so called ‘No Winner’ trade fight
between the world's two largest economies. Both countries have imposed tariffs on numerous
goods worth billions, leading to huge losses to traders between these two economies and
ultimately leading to higher costs for business and consumers.
According to Ms Mosee her products had seen a rise of import duty that nearly doubled in the
last year. Ms Mosee said that the import duties on her bags were "already expensive" at 17.6%
before the conflict started and now the rate is as high as 42.6%.
"As a small businesswoman my finances were already a little tight. I had to figure out how I was
going to get the money to operate the business. We're all paying for this, not only China," she
said.
Ms Mosee now was left with no other option but to raise the price of her products. As expected
she raised the price of some bags by roughly 25% to compensate for the higher import tariff.
These price hikes meant that her customers, who purchased online from various countries like
UK, Dubai, Canada and Australia, would also feel the knock-on effects of the trade battle.
Case Study 2
This case study looks at a company which responded by shifting its production firm from China.
This company that has made the move is another United States seller of bags and travel
accessories, Litegear. Its products are mainly composed of recycled plastic bottles and were all
manufactured in China.
A recent survey which was conducted by the American Chambers of Commerce in China found
that 40% of the affected firms had considered shifting or had already moved their Chinese
manufacturing units to South East Asia.
When tariffs on some of company’s goods were hiked by 10% in the late 2018, chief executive
Magi Raible had a strong feeling that these might increase with time. As expected by her, the
tariffs were increased to 25% but she had already jumped her production out of China to
Cambodia.
Now at this time of the year, around half of her products, mainly smaller accessories are
made in the South East Asian country of Cambodia while the rest are still made in
China. Despite her quick action her profits were hit by 15%.
"The learning curve has been very steep and I'm fighting this battle… and I'm adjusting,
but it costs jobs, it costs building the business, it costs profits." Later her business
partner went out of business and she lost all the hope to double the size of her
business.
She, like all others doesn't oppose the overall trading practices of China but at the same
time isn't convinced with the ongoing strategy.
"I feel that the approach is hurting Americans way more than helping the problem."