Companies mull stockpiling as trade war turns tricky
is the reflex response by firms to the imposition of
tariffs
, but with the rapidly-changing position of the
Trump administration
, companies are finding that it isn't so straightforward this time around.
#Pahalgam Terrorist Attack
India stares at a 'water bomb' threat as it freezes Indus Treaty
India readies short, mid & long-term Indus River plans
Shehbaz Sharif calls India's stand "worn-out narrative"
Whether it's the luxury, electronics or pharmaceutical sectors, Trump's unpredictability complicates the calculations of firms. Some companies didn't wait for the April 2 announcement of massive "reciprocal" trade tariffs: they had already begun shipping more of their goods to the US.
In the end, Trump backed down quickly on the "reciprocal" tariffs, pausing them for 90 days except for China.
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That still left the global 10% tariff in place, as well as the 25% tariffs on European steel, aluminium and cars.
French cosmetics firm Clarins didn't hesitate and stepped up shipments to the US at the beginning of the year. With all of its products made in France, Clarins had few other options to mitigate the tariffs.
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Even if they don't all acknowledge it so openly, firms in many different sectors are stockpiling their products in the US.
In March, exports of Swiss watches to the US jumped nearly 14% compared to the same month last year. More striking is Ireland, which plays host to a number of global pharmaceutical firms. Its exports to the US jumped 210% in February to nearly $14.8 billion.
Lufthansa Cargo said it has seen in recent weeks "an increase in demand for shipments to the United States". The
trade war
"has incited companies to accelerate certain stages in their supply chains", it told AFP.
The phenomenon also concerns US-made goods. Nikkei reported recently that Chinese tech firms were snapping up billions of dollars of AI chips made by Nvidia in anticipation of US imposing
export curbs
.
Stockpiling is not a solution, however, said analysts. Matt Jochim, a partner at consulting firm McKinsey called stockpiling "a very short-term opportunistic" move.
He said the practice has limits as tariffs are constantly changing and it isn't always practicable. "In a lot of the electronics space... because the technology changes so quickly, you don't want to get stuck with inventory of chipsets or devices that are the prior version," he said.
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