- A 90-day tariff reprieve between the US and China has prompted companies to restart paused manufacturing and shipping operations, despite tight timelines and potential cost surges.
- Firms like Therabody, Bogg Bag, and Net Health Shops are moving fast to capitalize on the window, navigating shipping bottlenecks, cost risks, and inventory constraints.
- Long-term uncertainty persists, with many businesses exploring alternative sourcing in countries like Vietnam and India to reduce dependence on Chinese manufacturing.
A temporary 90-day reduction in tariffs on Chinese goods, following US-China trade talks, has sparked a flurry of activity among American importers. The brief window is prompting companies to resume paused production in China and rush shipments to the US while lower tariffs remain in effect. While the relief is short, it’s long enough to tempt businesses back into action despite looming logistical hurdles, according to MSN.
Therabody, a wellness product maker based in Los Angeles, has already restarted manufacturing and is increasing output in China. CEO Monty Sharma noted, “In my 40 years of work, I’ve never been happier “about a 30% increase in our costs.”
Companies Move Swiftly, But Not Without Challenges
For many businesses, restarting isn’t as simple as flipping a switch. Bogg Bag, which had previously halted production, has resumed operations and reversed plans to raise prices, at least temporarily. However, to avoid last-minute manufacturing chaos, the company is reducing its fall and holiday product lineup by nearly half. CEO Kim Vaccarella emphasized the urgency, stating, “Let’s get them finished, let’s get them loaded and on the water,” highlighting concerns about port congestion.
At the Port of Boston, early signs of renewed demand are emerging. Shipping line Evergreen Marine Corp. had reduced service due to weakened trade flows, but with the tariff break in place, the Massachusetts Port Authority is now fielding calls from companies ready to ramp up imports, said CEO Richard Davey. Key goods moving through the port include furniture, toys, apparel, and plastics.
Inventory Strategies and Price Implications
The temporary nature of the tariff cut is prompting businesses to quickly release inventory stored in Chinese warehouses and prepare for a potential price hike post-reprieve. David Chitayat, CEO of Genimex, which manages contract manufacturing for global brands, said firms are likely to stock up during this window to guard against further trade instability.
“The tariffs are still meaningful, but should be manageable for most brands,” Chitayat said, provided companies increase prices. A 30% jump in manufacturing costs equates to a 5% to 10% increase in consumer prices, he added. Still, he cautioned that shipping costs are likely to rise due to a sudden spike in demand. “Shipping is going to be a mess with everyone scrambling to get space,” he warned.
Not all companies can react swiftly. Tarptent, a California-based outdoor gear brand, had asked its supplier to pause orders earlier this year but is now considering whether it can resume them. However, sourcing specialized US-made fabric and shipping it to China within the 90-day window may not be feasible. President Henry Shires expressed doubts, stating, “At this point I would say that the 90-day window is very narrow — and the window givers are too unreliable — to risk a big investment.”
On Monday, Shires was waiting for sunrise in Hong Kong to check if the factory could use fabric already on-site. “I guess that it is pretty unlikely,” he admitted.
Outlook: Short-Term Boost, Long-Term Shifts
The tariff reprieve benefits some companies, including Net Health Shops LLC. CEO Chuck Gregorich said the home goods company is considering shipping containers that were on hold since March, a move that could ease supply shortages.
Yet, like others, Gregorich is wary of long-term volatility. “My mind is already in those other countries,” he said, referring to sourcing alternatives like Vietnam and India, as prices for Chinese goods are expected to remain elevated even beyond the 90-day window.
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Source: MSN
