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Connexion Insider Blog

Friday, May 24 2019

Retailers are speaking out and warning of higher prices:

As this trade war drags on, :the retail sector of our economy has been weighing in; Kohl's, J.C. Penney, Home Depot, among others have been applying whatever influence they can muster with the Trump administration in seeking a quick resolution. Illustrating the scope of the impact on the retail sector, more than 170 shoe retailers, including Nike, Under Armour, Adidas, Foot Locker are also petitioning for a halt in raising tariffs on footwear imported from China. Not much of an appetite for this food for thought?

Can China leverage its dominance of rare earth minerals in the ongoing trade dispute?

The Mountain Pass mine in California was the only US producer of rare earths - but it closed in 2015 and sold to China-backed Shenghe Resources Holding two years later. Of the $155 million we import of rare earths annually, a staggering 59 percent is imported from China. While rare earths, a somewhat misnomer, aren't really rare at all - just the appetite for building the mining infrastructure is. If we learned anything during the "rare earth shortages" of 2012 (more an issue of China tightening exports than an actual shortage),there are a countless number of technologies that are dependent on rare earths; electric cars to wind turbines, smartphones to missiles. In the electrical industry, we saw this shortage affect the availability of lighting products from ballasts and lamps to occupancy sensors. Hope for the best, prepare for the worst...

Yet in the muddled fog we saw a beacon of thought leadership:

We have seen a number of price increases from the electrical and lighting manufacturing community being attributed to the US-China trade war (shown in the table below). Not to minimize the impact of these tariffs on the supply chain, some of these price increase notifications we've seen have a more pro forma feel to their messaging (as expected), and less a preponderance of thought leadership. That is until the notification we just received from Satco Products, Inc."While Satco may be forced to implement a pricing policy to address the additional 15% tariff that became effective May 10, 2019, we have decided to take a deep breath and acknowledge that the US and China are in a trade war, and one tweet at any time could announce a resolution to this conflict." States Satco Products President Bill Gildin in his notification letter. We don't expect the price increase notifications to end any time soon, but hopefully Mr. Gildin's letter will trend towards more forethought and less mechanical responses.

Posted by: AT 11:10 am   |  Permalink   |  0 Comments  |  Email

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