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the firm-level tariff-inclusive price increased The research team also explored obstacles that
by 1%, the total exports of firms, on average, firms faced in expanding to alternative foreign
decreased by 0.83%, and total sales decreased markets in response to U.S. tariff surges. The
by 0.63%. majority of survey respondents (59.3%) cited
the lack of established sales channels and
• Impact on profitability. sales networks, which limited their ability to
divert sales to non-U.S. markets. However, firm
Researchers additionally confirm that U.S. managers also cited different product standards
tariff hikes negatively impacted exporting firm and specifications (22.9%), lack of brand
profitability. According to this analysis, as the awareness (25.3%), lack of adequate assurance
firm-level export price, including U.S. tariffs, of payment collection for pre-sold merchandise
increased by 1%, firms’ profit margin dropped (25%), and insufficient market scale (25.3%) as
on average by 0.35 percentage points. Sampled other important barriers. As for why firms were
firms, furthermore, sustained a negative profit unable to shift their sales to China's domestic
margin of –0.06 (or –6 percentage points) market, nearly half (46.6%) of the survey
during the sample period from January 2017 to respondents cited the lack of established sales
April 2019. channels and networks as the primary factor.
• Survey explores factors limiting • Exporters in China struggle to effectively
adjustments to export prices and sales. respond to U.S. tariff hikes.
Researchers next surveyed 600 firm managers China’s exporters faced significant challenges
to better understand what prevented in responding adequately to U.S. tariff hikes in
companies from adjusting the price of their 2018. According to the analysis, China’s exporters
goods in response to the U.S. tariff hikes. were largely unable to adjust their export prices
According to the survey, 72.7% of managers and quickly divert sales to alternative markets,
pointed to their already low profit margins, which led to declines in sales and profitability.
which limited their ability to enact further This research suggests that the U.S. tariffs had a
price cuts, while 21.1% of firms were bound negative impact on the business environment for
by their contractual obligations to maintain China's exporting firms, although the long-term
existing prices. effects are still unknown.
Impact of U.S. tariff rates on export prices
SOUTH CHINA BUSINESS JOURNAL 24
by 1%, the total exports of firms, on average, firms faced in expanding to alternative foreign
decreased by 0.83%, and total sales decreased markets in response to U.S. tariff surges. The
by 0.63%. majority of survey respondents (59.3%) cited
the lack of established sales channels and
• Impact on profitability. sales networks, which limited their ability to
divert sales to non-U.S. markets. However, firm
Researchers additionally confirm that U.S. managers also cited different product standards
tariff hikes negatively impacted exporting firm and specifications (22.9%), lack of brand
profitability. According to this analysis, as the awareness (25.3%), lack of adequate assurance
firm-level export price, including U.S. tariffs, of payment collection for pre-sold merchandise
increased by 1%, firms’ profit margin dropped (25%), and insufficient market scale (25.3%) as
on average by 0.35 percentage points. Sampled other important barriers. As for why firms were
firms, furthermore, sustained a negative profit unable to shift their sales to China's domestic
margin of –0.06 (or –6 percentage points) market, nearly half (46.6%) of the survey
during the sample period from January 2017 to respondents cited the lack of established sales
April 2019. channels and networks as the primary factor.
• Survey explores factors limiting • Exporters in China struggle to effectively
adjustments to export prices and sales. respond to U.S. tariff hikes.
Researchers next surveyed 600 firm managers China’s exporters faced significant challenges
to better understand what prevented in responding adequately to U.S. tariff hikes in
companies from adjusting the price of their 2018. According to the analysis, China’s exporters
goods in response to the U.S. tariff hikes. were largely unable to adjust their export prices
According to the survey, 72.7% of managers and quickly divert sales to alternative markets,
pointed to their already low profit margins, which led to declines in sales and profitability.
which limited their ability to enact further This research suggests that the U.S. tariffs had a
price cuts, while 21.1% of firms were bound negative impact on the business environment for
by their contractual obligations to maintain China's exporting firms, although the long-term
existing prices. effects are still unknown.
Impact of U.S. tariff rates on export prices
SOUTH CHINA BUSINESS JOURNAL 24
