President Trump’s mercurial approach to trade agreements, including threatened tariffs, has many Minnesota companies scrambling.
Bob Oberlies, head of Fredrikson & Byron’s China practice, who lived in Beijing, Hong Kong and Shanghai for more than a decade, has been in big demand for advice from multinationals and private equity firms.
What does a potential trade war mean for Minnesota and the Midwest? It won’t be easy.
Oberlies insights for Midwest firms include:
• Those selling to China and sourcing from the United States may have to scramble to absorb tariffs in the short term and restructure supply chains over time.
• Midwest companies may be more likely to consider either using Chinese suppliers for domestic China sales or working with contract manufacturers.
• Midwest companies may need to consider setting up manufacturing facilities in China. But that hasn't always worked out well.
• Midwest companies with existing operations in China might face bureaucratic challenges.
• Visas and work authorizations might face heightened scrutiny both ways.
• Sales in China might drop because of the perceptions of local customers.
Trump has flummoxed-to-angered close U.S. allies such as Canada, Mexico and France with a go-it-alone deal-making approach that he insists puts American interests first. Some trade experts say Trump's approach threatens multilateral pacts that have benefitted American consumer, as well as countries such as China that have moved hundreds of millions out of poverty with manufacturing and an export-oriented economy.
China offered to purchase nearly $70 billion of U.S. farm, manufacturing and energy products if the Trump administration abandons threatened tariffs, according to the Wall Street Journal earlier this week. Chinese negotiators led by Liu He, President Xi Jinping’s economic envoy, presented a U.S. team headed by Commerce Secretary Wilbur Ross a package that includes Chinese companies buying more U.S. soybeans, corn, natural gas, crude oil, coal and manufactured goods.
Chinese and U.S. officials estimated the value of the package at nearly $70 billion in the first year.
Trump has pressed China to commit to reduce the $375 billion U.S. merchandise trade deficit with China by $200 billion.