The White House’s warning of possible sanctions at the end of May due to China’s treatment of Hong Kong was just the latest clash between the two nation’s in their increasingly strained relationship.
In January, Chinese President Xi Jin Ping and Trump signed a preliminary trade deal in which China agreed to the purchase of hundreds of billions of dollars in American goods. Then COVID-19 took the world by storm, causing massive economic downturns due to public shutdowns and unprecedented unemployment numbers in the US.
Trump’s accusations against China regarding the source of the virus and their handling of containment efforts only fueled growing anti-China sentiments and xenophobia. The Administration started restricting the export os some sensitive technologies, and Trump called for reduced dependence on Chinese produced goods.
The COVID-19 restrictions have walloped American small businesses as imports were halted, causing a breakdown in a supply chain that has become heavily dependent on Chinese manufacturing for the past three decades.
As manufacturing left the US and gained hold in China, American producers became reliant on cheap, high-quality goods for their production, particularly in the musical equipment and gear production industries. China had become a trusted partner for many companies. With the growing climate of anti-chines sentiments and lack of manufacturing growth in America, there could be a looming vacuum for American companies that rely on their relationships with Chinese manufacturers.
Portland-based modular synthesizer company 4MS is just one of many local businesses that have been impacted by the pandemic and its subsequent supply chain breakdown.
“Back in early March, we were slated to release a new euro-module which we had already built a huge amount of hype and were super excited to bring to market. The shutdown meant we couldn’t get our components in from China and had to postpone the release,” 4MS’s Jeannot Quenson says. “It’s hard because we’e a small team, and we can’t wait out six-months or a year of not producing any modules or racks.”
As these tensions grow, some analysts fear that increased tariffs from either nation could be used as retaliation, which weakened economies would not be able to absorb.
The underlying issues exposed by the coronavirus existed before the pandemic, but the effects it will have on manufacturing, and small businesses may last for years. Companies in nearly every industry will be forced to examine their supply chain logistics and develop solutions based on new realities.