Business Adjusts to Trade Disruptions
Commerce, like water, will find ways to seep through or work around government barriers. The current trade dispute between China and the United States is no different. Despite the tariffs levied by both countries designed to thwart or make trade and commerce more costly, private companies are adjusting in order to continue to conduct their businesses, albeit in a less efficient manner.
For imports into the U.S., companies are shuttering manufacturing facilities in China and expanding or relocating to other Asian nations, Mexico, or other countries not facing tariffs on imported goods into the U.S. At the same time, U.S. agribusinesses are investing in China and other countries bordering China to continue to have access to the Chinese market. Tyson has purchased poultry processing plants in Thailand, the Netherlands, and the United Kingdom and reportedly are in negotiations to make a multi-billion-dollar investment in the beef industry in Kazakhstan. It has also been reported Louis Dreyfus has started construction of an animal feed plant in China in partnership with one of the largest Chinese feed producers.
Businesses changing practices to avoid tariffs or taxes has a long history. Colonial importers diverted shipments of tea from British colonies in the Far East to non-British ports before arriving in America to avoid the British tax on tea. More than 200 years later businesses are responding to government policies in similar ways.