A worker uses tweezers to handle small circuit board components for electronic switches at the Schurter AG factory in Lucern, Switzerland, (Photographer: Stefan Wermuth/Bloomberg)

Supply Chain Caught in Crossfire of U.S.-China Trade Conflict

(Bloomberg) -- The Trump administration’s China tariffs spared some finished goods like smartphones and washing machines, while charges on parts and components could drive up costs in the U.S. supply chain.

The president’s move to target $50 billion worth of Chinese imports for additional duties of 25 percent includes parts for planes, printed circuit boards, light emitting diodes and optical fibers, according to a list by the Office of the United States Trade Representative.

It’s too early to tell which manufacturers will pass higher costs on to customers or seek cheaper suppliers outside China, should the tariffs take effect in three weeks’ time. U.S. President Donald Trump has said the goal is to punish Chinese companies for intellectual property theft, a sensitive issue as the world’s No. 2 economy makes the transition from the world’s low-cost assembler of devices like Apple Inc.’s iPhone to an innovator that makes its own chips and components.

Chicago-based Boeing Co., the world’s largest planemaker, on Saturday said it’s assessing the effects on its supply chain of Trump’s tariffs and China’s reciprocal action.

The planemaker, which counted on China for about $12 billion in revenue last year, also said in an emailed statement that it is pushing for the countries to settle. “We will continue to engage with leaders in both countries to urge a productive dialogue to resolve trade differences, highlighting the mutual economic benefits of a strong and prosperous aerospace industry," Boeing said.

In retaliation to the U.S. tariffs, China’s Finance Ministry issued a list of 545 product categories, also covering about $34 billion in exports from the U.S., to be subject to an additional 25 percent tariff starting July 6. They included a variety of agricultural products, including soybeans, corn and wheat along with beef, pork and poultry, plus automobiles -- targets that may raise prices for Chinese consumers, but may have a tangential effect on manufacturers.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net;Gao Yuan in Beijing at ygao199@bloomberg.net

©2018 Bloomberg L.P.

With assistance from Editorial Board