SOURCE :- THE AGE NEWS
Guangzhou: When news broke this week of a 90-day trade truce between the US and China, Monica Xie hit the phones immediately.
For more than a month, the Chinese toy company she works for had been paralysed by the ratcheting trade war as the world’s two biggest economies whacked each other’s imports with sky-high tariffs, grinding shipments to a halt on either side of the Pacific Ocean.
Monica Xie, 33, sales representative of a Guangdong-based toy company, said she began calling US suppliers this week as soon as the trade truce was announced.Credit: Sanghee Liu
For Xie’s company, Shantou Mingbo Toys, that meant tens of thousands of children’s dolls ready to ship in US-bound containers had been stranded at its warehouse in the port city of Shantou, in the southern Chinese province of Guangdong.
The company’s business model is almost entirely geared towards the export market, Xie said, with America accounting for 50 per cent of its sales. It counts massive retailer Walmart among its buyers.
“I’ve already started contacting US customers regarding price and products,” Xie, 33, a sales representative, said in a phone call with this masthead this week.
“If possible we will get the shipment done within 90 days.”
The armistice struck between US and Chinese officials in Switzerland, announced on Monday, sets up a 90-day reprieve from the crippling tariffs, replacing them with lower duties while the two sides continue negotiations to broker a larger trade deal.
It is expected to kickstart a flurry of exports as companies race to move goods within the three-month window. Under the temporary deal, the US agreed to slash its import taxes on Chinese products from 145 per cent to 30 per cent, and the Chinese side agree to reduce its duties on American good to 10 per cent, down from 125 per cent.
The reprieve may well have saved Christmas for many American children. About 80 per cent of the toys sold in the US are manufactured in China.
At the Canton trade fair in Guangzhou last week – one the world’s biggest trade shows where Chinese manufacturers showcase their products for exports – toy sellers remarked at the absence of American agents and buyers who would usually be placing orders on behalf of US retailers for the busy Christmas period.
An overseas buyer talks to a Chinese toy exporter at the Canton trade fair in Guangzhou, Guangdong Province, in early May. Credit: Sanghee Liu
“We had some pre-existing US customers but all these people didn’t show up this year,” Vicky Wang, sales representative for toy company Guangdong Weili Intelligent Development, told this masthead at the show.
American small business owner David Mauro told CBS News this week he had resumed shipments of $US100,000 ($155,000) worth of Christian-themed dolls from China for his business of Jesusdoll.com, which will see him pay $US30,000 in duties.
“For us, it means there’s going to be a Christmas this year,” he told the US network, describing the 30 per cent tariff as “painful” but not prohibitive.
“It’s huge for our retailers, who were on the verge of not having any product at all.”
When US retailers began warning last month of Christmas toy shortages, dwindling inventories, empty shelves, and huge price hikes, US President Donald Trump was ridiculed by his critics for adopting a Grinch-like attitude to concerns about the tariff induced-scarcity.
“Well, maybe the children will have two dolls instead of 30 dolls. And maybe the two dolls will cost a couple bucks more than they would normally,” Trump said last month.
Chinese exports to the US plunged 21 per cent in April, compared to the previous year, while shipments to South-East Asia surged 21 per cent, as companies redirected their goods.
For now, businesses continue to have little certainty about what lies ahead, with the prospect of hefty tariffs being reinstated if no deal is reached after 90 days complicating plans for future manufacturing orders or shipments.
“Any tariffs above 35 per cent would kill most of the exports because that’s the entire gross profit margin for China’s export sector,” said analyst Dan Wang, director of Eurasia Group’s China team.
“Even if we go back to the 60 per cent that Trump liked to quote [before taking office], that is still substantial enough to cut direct trade between China and the US.”
Xie said Shantou Mingbo Toys would turn no profit on US exports if it was forced to absorb the current tariff.
“Thirty per cent [tariff] is still too high. We need to wait and see if our customers can bear the tariff. It’s definitely impossible for us to bear it,” Xie said.
Get a note directly from our foreign correspondents on what’s making headlines around the world. Sign up for our weekly What in the World newsletter.
