If you’re still relying on Chinese suppliers, you'd better come up with a new plan

If you're running a business and you have overseas transactions with customers and suppliers in Europe, South America, Mexico or Canada, I wouldn't be worried too much about tariffs.  

Yes, there’s a good chance that your costs will be higher for a period of time. But ultimately, there will be new rates negotiated by the Trump administration that will likely be lower than what they are now. It may take a few months, and as with any negotiation there will be ups and downs, threats and compromises. But these countries depend on the U.S. consumer way more than the other way around. They’re going to need to settle, and they will. 

However, if your business is relying on Chinese products, you've got a much bigger problem. That's because the tariff conversation — despite all the drama — has really been about nothing other than China. And if you're a watcher of President Trump, you shouldn't be surprised. This is nothing new.

Let's go down memory lane, to 2018, midway through the first Trump administration. At that time, the president also threatened tariff increases against Mexico and Canada, but those differences were eventually worked out.

China, on the other hand, remained an open sore. 

Three times during 2018, Trump increased tariffs on almost $350 billion of Chinese products, including machinery, mechanical appliances, electrical equipment and other capital goods. China struck back midway through the year with 25 percent tariffs on nearly $45 billion of U.S. exports, including vehicles, crude oil, plastics, chemicals, liquified propane and a lot of agricultural and food products like soybeans. Trump then returned the volley a month later, with more tariffs on goods ranging from telephones, computers and furniture to lamps and luggage. That list covered almost half of the goods imported from China. 

What happened? Many economists argued that the tariffs did more damage than good. But the data was incomplete. Some tariffs stuck. Most others fell by the wayside.  

And then came the pandemic. 

COVID took away everyone's attention in early 2020. Biden became president in 2021 and, although he implemented a range of Chinese tariffs on items ranging from electric vehicles and batteries to critical minerals and semiconductor chips in 2024, most of the Trump-era tariffs were forgotten.  

But no longer. Trump is back. And, like in 2018, this is not just about tariffs; this is about a lot of grievances that he and so many U.S. businesses have against China. 

In 2018 the Trump administration placed many more demands on China that went well above reducing tariff rates and balancing trade. Trump wanted billions in specific deficit reduction and the elimination of rules that made it easier for China to access American technology. He wanted to end the practice of forcing American companies operating in China to enter into joint ventures with Chinese companies (or the Chinese government). His administration laid out specific plans to end piracy and economic espionage and demanded quarterly reviews to ensure that compliance was being taken seriously. 

“We are the ones in the deficit position," Trump's Secretary of Commerce, Wilbur Ross, said at the time. "That means they have more to lose at the end of the day than we do.” 

Unsurprisingly, none of this happened. Our trade deficit with China has only gotten worse. In the last year, it reached approximately $300 billion, a number far higher than it was when Ross made his statement.

But some things have changed in America's favor. The Chinese economy has slowed since then. China has become more dependent on the U.S. consumer than it was. Its real estate market is imploding, and its reputation — particularly after the COVID debacle — has worsened. Its political leaders have become more autocratic. Its attractiveness to Western companies has waned. Its military actions have become more belligerent.

The last time around, Trump turned to tariffs halfway into his term. That was a mistake — by then, he had lost his majority in Congress and a lot of political capital. But not this time. This time, he's serious. 

Trump knows that China is the true threat to America, both militarily and economically. As a businessman, his war is a trade war. And like any war, there will be sacrifices. Consumers can expect to see much higher prices on Chinese goods over the next few years. American businesses reliant on Chinese suppliers and customers are going to suffer.  

But that's their fault. They were warned in 2018. They have had time to adjust their supply chains and their sales channels. Those who took the profits and decided not to adjust will become collateral damage of this trade war.

I hope they have made alternative plans. If they haven't, they're in for a rough few years. 

Gene Marks is founder of The Marks Group, a small-business consulting firm.