While politicians use economics as a tool of influence, merchants have nothing to do but to adapt to changing conditions. Thus, businessmen try to shield themselves from the effects of an escalating US-China trade dispute to avoid losses.
American companies still import Chinese goods using every opportunity to evade tariffs. For example, many of them move production abroad. In other words, goods are almost completely produced in China, but the final stage of their manufacturing, assembly, is carried out in a country other than China, for example, in Vietnam. Such goods are no longer subject to the new tax law. Paul Donovan, chief economist at UBS Wealth Management, paid attention to this strategy. US firms also import goods into the United States through their foreign divisions avoiding tariffs.
“A US company importing electrical switches from China now has to pay the new trade tax. A US company importing something that uses Chinese electrical switches from a Canadian subsidiary does not have to pay the new trade tax,” Donovan said in a note. He relies on official data showing that exports of some goods to Canada increased substantially after the US taxes.
