Blog/News

Trade War with China Rages On

Sadie Keljikian, Express Trade Capital

Per last week’s announcement, the White House has raised existing tariffs on $200B worth of Chinese imports from 10% to 25% and is now threatening new tariffs of up to 25% on an additional $300B worth of Chinese imports as part of its ongoing trade war with China. The latest list targets a wide variety of goods, including apparel, accessories, food and beverage products, and livestock.   

President Trump seems optimistic about reaching an agreement with Chinese President Xi Jinping and downplays the conflict as a “little squabble…because we’ve been treated very unfairly for many, many decades.” The proposed changes will likely take effect in late June or July unless a trade agreement can be reached before then. Importers should begin preparing to either pay the newly raised tariffs or acquire their goods elsewhere.   

Talk to our team today to learn how ETC can help you plan for the increased costs your business will incur due to the new tariffs and how to protect your business during these uncertain times.   


Tariffs on Chinese Imports May Rise Again

Sadie Keljikian, Express Trade Capital

Due to delays in establishing a trade deal between the US and China, the President unofficially announced plans to raise the trade remedy tariff from 10% to 25% effective Friday. This will seemingly apply to all List III goods. The President also suggested a possible extension of the trade remedy tariffs to all imports from China.

Although an official notice has not been published yet, it is wise to prepare for the tariff increase as of May 10 if you import any included goods from China.

Contact us today to learn about ETC’s trade protection financing options.


Managing Director Mark Bienstock Talks Trade War with California Apparel News

Business owners who rely on China’s abundant manufacturing facilities and low production costs may be in for a massive challenge. The ongoing trade war the US government has waged with China may not end by March, meaning more potential tariffs that could disrupt the global economy.

ETC’s own Mark Bienstock and other industry experts spoke to California Apparel News this week about strategies to protect yourself and your business from the effects of this ongoing international conflict.

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Handling SBA Loan Lags

Sadie Keljikian, Express Trade Capital

The current government shutdown is the subject of nation-wide distress for myriad reasons. Sources are reporting that the shutdown, which is officially the longest in US history, has delayed public services like tax refunds, food, beverage and aviation product safety inspections, and millions of dollars in Small Business Association loans.

Generally, the SBA handles approximately $200 million in loans daily, but since the shutdown began, they’ve been unable to provide any financing aside from disaster assistance. As a result, hundreds of small businesses nationwide have waited a month for vital funds to help them grow and operate.

While many of the delayed loans are relatively small amounts, nearly 40% of them are known as 504 loans. These are meant to help business owners purchase real estate or costly equipment and can amount to $20 million or more. Regardless of quantity, many small business owners who rely on these loans are wondering how to bridge the gap until SBA loans are readily available again. The answer depends on where each business falls in the wide variety of industries the SBA serves.

Substituting these loans directly is tricky. If you or your business have very good credit, you may be able to replace your SBA loan with a regular bank loan, but it will likely take at least 60 days to reach you, which is decidedly unhelpful when speed is a priority.

We’ve discussed creative financing methods before, but not in terms of which methods are fastest. Depending on your budget, there are a few options that will give you access to quick funding for your business:

  • Factoring your receivables.

If you’re selling goods to creditworthy retailers, you can receive financing against your unpaid invoices. Provided you have all necessary materials and enough volume to qualify, you may receive funds within a day or two with this method.

  • Finance your purchase orders.

Purchase order financing (or PO financing) is a method designed precisely for wholesalers who need help covering production and shipping costs while they wait for their customers to pay. So, if you have purchase orders from creditworthy customers and need to bolster your business’s funds, PO financing is a great option.

  • Borrow against your unsold inventory.

If you have a stockpile of unsold inventory and a solid track record of consistent sales, you can borrow against your unsold inventory. This can take slightly longer than financing against your receivables or purchase orders since it requires a field examination (as do any lending arrangements involving goods, equipment, or real estate), but can be a highly useful tool if you find yourself in a slow season.

  • Enter a merchant cash advance agreement.

If your customers pay you with credit or debit cards regularly, you may want to consider merchant cash advance options. Merchant cash advance arrangements, or MCAs, aren’t technically considered loans, but operate in a very similar way. At the onset, you receive a lump sum in exchange for a percentage of your future credit/debit card sales. With an MCA, you will receive funds very quickly, but it is important to note that this is by far the most expensive option, as interest tends to run extremely high among MCAs and compounds over time.

There are numerous ways to handle an unexpected lag in your business’s operational funds, but be careful not to let an urgent situation lead you to poor lending choices that could hurt you down the road.

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Changes to GSP Eligibility

Results of a GSP review have just been published as Presidential Proclamation 9813. This announcement lists changes to select products and countries. The GSP status of these identified articles is effective for goods entering on/after November 1, 2018.

If you would like more information or analysis as to how this impacts your company, please contact our logistics department at logistics@expresstradecapital.com.


AMS Plans Cotton Fee Increase

The Agricultural Marketing Service has released a statement announcing that it plans to raise the “cotton fee” applied to imported cotton goods from $0.011510 to $0.011905 per kilogram. Adjustments to the fee occur regularly to ensure that assessments collected on imported cotton match those paid on domestically produced cotton.

The announcement stipulates that the new rule will take effect October 16th, 2018, barring significant adverse feedback between now and September 17th.


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New Tariffs Imposed on Turkish Steel

Sadie Keljikian, Express Trade Capital

The president has released yet another tariff-imposing proclamation. The latest in a series of recently implemented “trade remedy tariffs”, the new proclamation will impose a 50% tariff on steel mill products from Turkey and will take effect immediately. The new tariffs have been incorporated into Section 232 of the Trade Expansion Act of 1962 and take aim at countries said to be engaged in “unfair” trade practices.

The president has also hinted that he may double tariffs on Turkish aluminum from the current 10% to 20%, but no formal announcement has been made as of now.


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Trade War Begins

Sadie Keljikian, Express Trade Capital

President Trump’s promised trade war has begun and it doesn’t look like there will be any winners.

Earlier this year, Trump imposed a series of new import tariffs on goods made outside the US, particularly those made in China. The move has been controversial, largely because each affected country’s respective economy relies heavily on exports. As many economists predicted, however, China, India, the EU and Russia have all fired back.

The president signed the so-called “Trump Tariffs” in March in an attempt to combat “unfair trade practices“ in China and other manufacturing hubs. The newly established tariffs targeted $34 billion in Chinese-produced goods, as well as numerous steel and aluminum goods manufactured abroad.

Shortly after news of the proclamations broke, the EU pledged to place new tariffs on American-made goods in retaliation. Soon after, China announced plans to impose a 25% tariff on US exports, including motor vehicles, soy beans and lobster, which also total at $34 billion in value. Russia followed suit last week and began introducing its own tariffs on US goods, including mining and road building equipment as well as oil/gas industry products. India joined in last week as well, notifying the World Trade Organization that it would raise tariffs on 30 US products including almonds, seafood and chocolate.

Experts continue to debate the precise effects that the trade war will have, but many agree that US traders will struggle to maintain financial stability and accessibility to everyday consumer goods. Although the US is economically stronger than any of the other involved countries, we lack the infrastructure and workforce to supplement the manufacturing resources on which we’ve become dependent in recent decades.

The trade war also drew controversy within the White House and among the Republican party. Several party leaders including House speaker Paul Ryan and former White House economic advisor Gary D. Cohn lobbied against the trade plan. Cohn even resigned shortly after the plan was set in motion, though it is unclear whether he left specifically due to the trade war.

As of now, it is still unclear what the lasting effects of this trade war will be, but sources warn that US consumers and exporters will suffer the most. It may seem counterintuitive, but a combination of the price increases on goods that we continue to import to meet demand and the devastating effect that retaliatory tariffs will likely have on US farmers and manufacturers will probably have a far more detrimental effect than most activity in the ongoing struggle.

Needless to say, it’s difficult to predict precise outcomes this early in the process, but given the buying and manufacturing powers at hand, the international trade industry may change dramatically.


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Trade Protection Financing Announced at ETC!

Express Trade Capital is pleased to announce the latest in our growing selection of innovative financing services with Trade Protection Financing. We will use a combination of specialized credit enhancements, along with preferred pricing structures, to offset any potential tariff cost implications due to new legislation. We are fully equipped to help you purchase goods at a reasonable price worldwide, even during these uncertain times, with our full spectrum of trade finance, supply chain, and logistical solutions.

Contact us to take advantage of this innovative and exciting new financial vehicle!