To survive trade war, some U.S. importers embark on major revamps of product lines



John Ruwitch and Timothy Aeppel | Reuters

SHANGHAI/NEW YORK (Reuters) – When U.S President Donald Trump tweeted in May his intention to raise tariffs on Chinese goods, management at California-based NewAir Appliances knew they needed to do something or their business would be in trouble.

The importer of beer fridges, ice makers and other household devices – all sourced from China – had tackled 10% tariffs imposed last year by seeking to cut costs and negotiating with big box and other retailers for better terms.

But the jump to 25% tariffs presented a much bigger challenge.

The day after Trump’s tweet, NewAir’s four-member leadership team met for lunch and began to formulate a more radical plan. There was a “level of tension”, said Andrew Stephenson, the company’s vice president for marketing, but no sense of panic.

The result: an ambitious overhaul of its product offerings, with 50-60 new or revamped goods set to come on the market this year – a move that allows the company to hit the reset button on pricing as their costs leap.

The product turnover is a huge increase for NewAir, which has a range of some 70 goods and usually introduces 10 or fewer new items each year.

Like NewAir, many importers of goods from China have had to make difficult business decisions and sharp changes in strategy as they reel from the impact of U.S. tariffs on $250 billion of Chinese goods.

With consumers and retailers often unwilling to accept higher prices for the same products, oft-heard tactics range from accepting lower profit-margins, to cost-cutting that may include lowering wages or laying off workers, to shifting production from China to other countries.

While the approach taken by NewAir and others in the sector requires significant investment, it underscores how the year-long U.S.-China trade war is forcing some companies to adopt novel workarounds as they fight for long-term survival and bump up against the limitations of belt-tightening.

“Instead of cutting costs we’re going to add some costs, but in the long run it will pay off,” Stephenson said by telephone after a trip to China to meet suppliers.

Working closely with suppliers to develop products, he is also implementing measures like air-mailing samples to the United States instead using cheaper maritime freight, aiming to slash up to a month off the process of getting goods approved.

“Basically, anything we can do to expedite the process is what we’re looking at doing,” he said.

NewAir, a company with 50-plus employees, would likely spend “hundreds of thousands of dollars” on the project and was considering hiring a marketing manager, as Stephenson’s focus shifts to dealing full-time with trade war strategy.

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