The trade war between the United States and China will affect businesses worth more than $250 billion. The components that are manufactured in China by the U.S. companies for selling in the home country are in limbo due to Trump administrations import tariff plans. Apple preemptively did its best by bumping up its products prices with the new launches. But, other US companies don’t have such resources or fan following to increase its prices to save its business. GoPro is the first company that has decided to move out of China for its US-bound camera production.
The US-China trade war has a direct effect on the consumers in the U.S. As the tariffs come into effect, the prices will increase and the consumer will have to cough up more than the usual. Not only the tariffs will affect the end user but will also eat into the profits of the manufacturer.
GoPro Will Move its U.S.-Bound Camera Production Out of China Soon
GoPro will move its U.S.-bound camera production from China by mid of 2019. It makes it the first well-known brand name from the U.S. to do so. This step is in reaction to the latest tariffs imposed on China imports by the American government. As the trade war escalates, more companies will move out of China in the coming months. By moving out of China, the companies will minimize the tariff impact but still won’t make as much as they were able to when producing in Chinese territory.
According to GoPro CFO, Brian McGee, the company requires agility to make such decisions and the current scenario has made it inevitable to shift its production unit of cameras that are meant for the U.S. consumers, out of China by summer next year. The CFO also said that the company is yet to make a decision on the new location where it will manufacture its cameras for the American consumers.
From electric scooters to electronic components, the tariff will have a direct effect on goods worth at least $250 billion in trade between these two nations. It seems that the companies operating its manufacturing from China have started to take Trump’s tariff threats seriously. Some may even consider moving out of China completely to avoid the threat of losing out to the competitors.
How Markets are Reacting
After the news broke out, the shares of GoPro has fallen 1 percent. Currently, trading at $4.92. Many analysts believe that the stock market performance of the companies affected by the import tariffs is an indication that the investors aren’t confident of finding a clear solution for the trade war soon.
As the companies move out of China, it will dent the image of the Chinese hegemony in the manufacturing sector. Other neighboring countries might take the lead of producing goods, replacing China as the preferred destination. Of the total 430 US companies in China, more than one third are looking to shift the manufacturing base.
It remains to be seen as to how far the companies are able to successfully shift its base of manufacturing and is there any other better country to serve the purpose of producing electronic goods cheaply.