I usually steer clear of politics here, but the potential U.S/P.R.C. Trade War has already impacted our industry. The bulk of martial arts equipment distributed in the U.S. - not just Chinese but Korean and Japanese too - even MMA - is manufactured in China. We've already felt some impact and are trying to keep prices down, but this may bode poorly for U.S. martial arts suppliers and consequently, U.S. martial arts. We know where our competitors get their merch. It's not like there are that many martial arts manufacturers in the world. Prices are rising across the nation.


Trump's Base In Panic Over 25% Tariffs On China Goods
Kenneth Rapoza
Senior Contributor
I write about business and investing in emerging markets.

The only way tariffs do not go up is if Liu He, China's chief trade negotiator, delivers a deal Trump cannot refuse.

The Trade Partnership forecasts 29,000 job losses in Ohio and 32,000 in Pennsylvania.


President Donald Trump arrives to speak at a rally at Aaron Bessant Amphitheater, Wednesday, May 8, 2019, in Panama City Beach, Fla. (AP Photo/Evan Vucci) photo credit: ASSOCIATED PRESS

Tonight's the night. And in Trump's baseland -- the farm belt and the small to mid-sized business owner -- everything is not all right.

Suffice it to say, they are in panic mode. Tariffs of 10% on some $200 billion worth of Made in China goods will go to 25% at midnight tonight. The only way tariffs do not go up is if Liu He, China's chief trade negotiator, delivers a deal Trump cannot refuse.

Clearly, no one is betting on it. The Dow is down nearly 400 points and China's A-shares, as represented by the CSI-300 Index, is down over 3%.

"I don't think people really understand what is at stake," says Alex Camera, CEO of Audio Control, a privately held, small business manufacturing audio sound equipment near Seattle, Washington. He imports electronic components from China and makes things like power amplifiers for cars. They design it and put it together in Washington. "Trump says China is paying these tariffs, but they are not. I am. U.S. companies are paying it at the port."

Tariffs are port taxes due at the time of delivery and paid to the U.S. government. At best, companies like Audio Control can renegotiate its contract with its China supplier in order to lower -- or in some cases -- zero out the impacts of the current 10% port duty. But the hike to 25% is the real game changer. To say the business community, long seen as one of the key voter bases of the Republican Party, are terrified of an escalating trade war would not be an understatement.

"The 10% tariff required us to curtail some of our investments," Camera says. "The potential of a 25% tariff from tonight would have a major impact on our investment and on our pricing. It frustrates me a little bit about how people see tariffs as an attack on the Chinese economy. Tariffs are an attack on my ability to use my cash to grow my business."


Both Nancy Pelosi and Chuck Schumer, high ranking Democrats, agree with Trump's tough stance on China. Trump's tariffs, however, have also helped the Democrats win back the House of Representatives as farm counties hit with China's retaliatory tariffs voted Republicans out of office in November 2018. (AP Photo/Andrew Harnik, File) photo credit: ASSOCIATED PRESS

Trump's weekend threat to raise tariffs on China came after he was told by his top trade negotiators, led by U.S. Trade Representative Robert Lighthizer, that China reneged on earlier promises. Lighthizer warned the market this week that tariffs were going up on Friday.

Bill Adams, senior international economist for PNC Financial said the tangible and unpredictable effect will be on business investment, to which Camera's claim serves as testimony.

"Tariff advocates have argued that they will divert investment into the United States so that businesses can maintain tariff-free access to U.S. consumers, but we haven't seen that," Adams says.

It hasn't been an overnight shift, but supply chains are definitely shifting out of China. Tiffany Zarfas Williams, owner of retail firm The Luggage Shop in Lubbock, Texas says she is looking for luggage and travel bags that are not Made in China. "We are looking to shift our supply chain," she said, begrudgingly, during a conference call with reporters on Thursday.

The China trade war is more complex than simply protecting manufacturing jobs, or reducing the trade gap between the two countries. It's a long game. And one of the goals of the game is to force U.S. companies to look outside of China for manufacturing. Some items are only made in China. Others, like toys and consumer electronics, are dominated by China. The KitchenAid blender is made in China. Nearly everything Mattel sells is Made in China. The fancy store bags and boxes shoppers at J.Crew use are only made in China.
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