By Dan Harris
There is an old saying about how lawyers do well when an economy is either rising or falling, just not when it is stagnating. When the US and Russia imposed sanctions on business from the other our international lawyers saw a massive bump in Russia related business for the following 3-6 months. Borrowing from the securities industry, we termed this a dead cat bounce.
The recent imposition of tariffs on China goods coming into the United States (and with more to come) have meant our China lawyers and our international trade lawyers have been receiving an unprecedented onslaught of phone calls and emails from companies asking what to do. We also have been receiving a slew of phone calls and emails from companies that sell their products to China seeking help with tariffs there.
The questions we are getting mostly center on the following:
- Are my products subject to tariffs? The lists are long and it is not always clear whether a particular product is on one of the lists or not.
- My products appear to be subject to tariffs, is there anything I can do to avoid them? Yes. You can fight inclusion of your product on the lists. See How to Get YOUR Products Out from Under the U.S.-China Trade War. Sometimes you can change your product enough so that it goes from being on one of the lists to not being on the list. Sometimes you can change where the products are shipped so as to avoid the tariffs. For instance, if you are having products shipped into Long Beach, California and then trucked to your facility in Nogales, Mexico, we should be exploring whether it might not make better sense to ship them directly to Mexico. If you are having all your products shipped from China to the United States and then stored in the US and sold from there within the United States and to other countries, well maybe you should at least consider having at least some of your shipments sent elsewhere.
- My products are subject to tariffs and there is no way I am going to be able to get around this. What are my other options? In the last year our international lawyers have helped companies shift some or all of their production to Brazil, Canada, Hungary, India,Mexico, Pakistan, Spain, Vietnam, and the United States. Is it time for you to do the same?
- Should I continue to manufacture in China, but then sell my products in the EU and other jurisdictions where no tariffs will be imposed? Yes. This is actually a great way to go for many companies. They can ramp up sales to countries other than the United States, which will likely serve them well now matter what ends up happening between China and the United States.
The one thing not to do: stick your head in the sand.
Dan Harris is founder of the Harris Bricken law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes ChinaLawBlog.com as a source of China legal and business information.