There was a ramping up of trade war with new trade tariffs imposed by the US last Friday, affecting vehicles, spacecraft technology, industrial machinery and medical devices and some electronic equipment. China responded with tariffs on food, tobacco, pet food, beverages and vehicles. This follows earlier tariffs on steel from China, the EU and Russia.
These new trade tariffs won’t directly impact most online retailers, unless they sell those specific products which are mainly industrial, but the ripple effect throughout the world economy will be felt. When goods cost more then ultimately either businesses are less profitable or costs are passed on to the end consumers.
In the grand scheme of things, these tariffs aren’t going to cause a worldwide recession, but they’re not going to help matters either. What can’t be ruled out however is further tariffs leading to a full blown trade war which could lead to a global recession.
Coming on top of the uncertainty of Brexit, an all out global trade war is something no one really wants to see, but for small independent marketplace traders, recession can actually be an opportunity, albeit one with challenges. In a recession, larger retailers feel the pinch quicker with their bloated real estate and salary bills. Smaller traders, especially online only, can find that their marketing budgets go further as the bigger companies rein in spending. However even for smaller traders the cost of goods is likely to rise but that will be balanced to a certain extent by consumers turning online for ever better deals to make their budgets stretch further.
Are you ready for an all out trade war? What steps have you got in place to ensure that you remain profitable and retain margins or do you think you’re already ideally suited to rid out the storm?