Some Australian companies are being caught out by the higher tariffs being put on China by U.S. President Donald Trump. Businesses that manufacture in China say they are unsure how long they can continue.
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00:00These companies I've spoken to are facing tariffs of up to 145%, not the 10% we have been saying is applying to Australian exports.
00:13And that really comes down to the fact that there are many companies here in Australia that manufacture their goods in China.
00:20I've spoken to a swimwear company that sells a lot of swimwear into the United States market.
00:27They think that they're going to get the far higher tariffs because they make these garments in factories in China.
00:33I've also spoken to a toy company that only just expanded into the United States market just a few weeks ago.
00:40They actually just got back from a trip in New York where they were celebrating being stocked in major department stores there.
00:48Here is a little bit of that company owner speaking to me.
00:51So most Australians think Aussie businesses only have a 10% tariff.
00:55Why do you have so much more?
00:56So our products are manufactured in China and at the moment the tariffs are being hit, the tariffs are being hit worse as the country, China.
01:03So that means your products going from China production to the States will be 100% more expensive.
01:09104% correct.
01:11And even if it was shipped from Australia, as long as they are manufactured in China, you would still be hit with that.
01:16And now it's all up in the air because who bears the cost of the tariffs?
01:20It just changes the game for us completely.
01:22So I've reached out to Austrade, the department that runs export negotiations overseas,
01:29and they haven't actually explicitly confirmed this situation to me for this story.
01:34I also put in a request to US authorities and didn't get a reply.
01:39However, I have spoken to several trade experts and they confirmed that unfortunately,
01:44these companies do have the right advice that they will be facing the far higher tariffs on their goods when they go to the US because they're made in China.
01:54Here is one of the experts that I just spoke to.
01:56The tariffs are going to be imposed on the basis of the origin of the products, not on the residency of the company.
02:04So that's where we start looking at where those goods originated from.
02:08And if they're wholly produced in China, then they're absolutely going to receive the higher tariff.
02:14Both of the companies I spoke to say they're not trying to make any hard and fast decisions.
02:18But obviously, if these tariffs are imposed and continue to be imposed, it will put a very big pressure on their business models.
02:27The toy company is currently looking at whether they can spread the extra tariff, which is essentially a tax on their goods across themselves.
02:35Taking some of that hit, they'll have to increase the price for American consumers.
02:39And they're also trying to negotiate with their wholesalers.
02:42But they say that they don't think they can pass this tariff on entirely because they just don't think American consumers would pay that much for their products.
02:49The swimwear company also says the same thing.
02:52They say that for now, they're just going to wear the tariffs and absorb them.
02:56But they say if this situation continues, they will look into other markets to make their goods, including Vietnam, Cambodia and even further afield in Africa.
03:06They said that it's actually difficult for them to bring production back to Australia.
03:12And that's because they say the garment industry here has been so decimated by many decades.
03:17Here's a little bit of that swimwear owner speaking to me as well.
03:20They just don't have the same supply chain and they don't have the same ability to execute as China does.
03:28China is literally the best at it in the world for what we do and for a lot of other industries too.
03:35Moving to another country is not what we want to do.
03:39Setting up in the US is not really viable for us either.
03:42We're an Australian company.
03:43Producing more here is also challenging because I would produce more here if I could.
03:47But our industry has been so decimated, there's not really much of a manufacturing industry here anymore.
03:53I have reached out to the Trade Minister, Don Farrell, but he has declined an interview.