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On March 23, 2018, the Trump administration announced that it would impose tariffs on $50 billion worth of goods imported from China each year and restrict Chinese investment in the US technology industry. A Sino-US trade war kicked off.

Based on the results of the "301 investigation", the Office of the United States Trade Representative announced a list of Chinese goods to be subject to tariffs. The list covers industries such as aerospace, information and communication technology, robotics and machinery, and contains about 1300 separate tariff items. The proposed list of taxed products will involve our $50 billion exports, with a proposed tax rate of 25 per cent.
 
Although the list does not cover textiles and clothing, the 58-page list contains most of the equipment required for textile production and processing. According to preliminary statistics, spinning, double twisting, loom (shuttle, shuttle-free), warp knitting machine, circular knitting machine, hosiery knitting machine, embroidery machine, printing and dyeing equipment, non-woven finishing equipment, etc. are involved, in addition to a variety of textile machine accessories, such as weaving shuttle, jacquard equipment accessories, loom accessories, etc.

China's textile investment in the United States mainly uses the cost advantages of cotton resources and low electricity in the United States for spinning and weaving processing. The finished products are exported to a third country or shipped back to China. Therefore, some textile investment in the United States may be affected. Export of related textile machinery equipment.

In order to defend China's own legitimate rights and interests, the Ministry of Commerce of China issued a notice on imposing tariffs on some imported goods originating in the United States. In accordance with the the People's Republic of China Foreign Trade Law and other laws and regulations and the basic principles of international law, the Chinese government will impose tariffs on soybeans and other agricultural products, automobiles, chemicals, aircraft and other imported goods originating in the United States at a rate of 25%, involving China's imports from the United States in 2017 of about US $50 billion.

It mainly involves some textile and chemical fiber raw materials, textile and chemical raw materials, textile and chemical raw materials, including: 52010000 uncombed cotton, 14042000 cotton linters, 29261000 acrylonitrile, 39019090 other primary shapes of ethylene polymers, 39100000 primary shapes of polysiloxane, 39081011 polyamide-6, 6 chips, polyethers 39072090 other primary forms, 39089010 aromatic polyamides and copolymers thereof, 39089020 semi-aromatic polyamides and copolymers thereof, other polyamides 39089090 primary forms, 34021300 nonionic organic surfactants, etc.

The world's two largest economies have engaged in a tit-for-tat trade war, each imposing tariffs on $50 billion worth of each other's goods.

As preparations for the new round of Sino-US economic and trade consultations, the Trump administration announced that it will impose tariffs on about US $200 billion of Chinese products from September 24, at a rate of 10%, and will be on January 1, 2019. Rise to 25% from January 1. It also said that if China took retaliatory measures against American farmers or other industries, it would immediately start a "third phase" of imposing tariffs on about $267 billion billion of Chinese products. In response to the decision to start with a 10 per cent tax rate and eventually rise to 25 per cent, Trump administration officials said it was to give U.S. companies "more opportunities to find alternative supplies and adjust accordingly". Previously, China responded by imposing tariffs on $60 billion worth of U.S. goods. If both measures go into effect, almost all U.S. goods heading to China will be subject to tariffs.

As the largest application field of non-woven fabrics in China, medical and health care is also the main driving force for the growth of spunbonded and spunlaced non-woven fabrics in China. What will be the impact under the Sino-US trade war?

Recently, the renminbi has continued to depreciate by more than 8%. For a large importer of bulk commodity raw materials such as chemicals like China, the cost of imported raw materials continues to rise. As the trade war between China and the United States intensifies, the RMB exchange rate may fall by another 15% in the next year.

For raw materials such as commodities, the price of materials that mainly rely on imports will rise, and the pressure of rising costs will be transmitted to downstream industries, including fluff pulp, SAP and other products. With the recent announcement by the United States that it intends to increase the tariff rate on about US $200 billion of goods imported from China from 10% to 25%, which covers sanitary napkins, diapers, pulp, wrapping paper, specialty paper, household paper and paper products. If the manufacturer mainly serves the domestic market, the devaluation of the renminbi will not bring about a decline in the price of raw materials. On the contrary, due to the cost of imported raw materials, prices may rise instead of falling.

For the medical industry, the main impact comes from disposable non-woven medical products. Due to the increase in the prices of raw materials such as PP particles and pulp, medical products with non-woven fabrics as the main raw materials will also face increased costs. However, due to the locking of bidding prices in the domestic market or market competition, it is difficult to raise prices for distributors or medical institutions. Therefore, the profit margins of medical product manufacturers will face squeezing at both ends of the value chain. For foreign trade enterprises, they are faced with tariff adjustment to enter the US market, which is bound to affect the competitiveness of domestic enterprises in the US market.
 
For the fierce tide of price increases, the internal digestion of the enterprise itself is not a long-term solution. According to market dynamics, manufacturers must also appropriately increase product prices, reasonable adjustments, and control within the scope of user acceptance. At the same time, enterprises need to adjust the supply channels of raw materials and increase the proportion of domestic procurement on the premise of ensuring quality. And through technological innovation to enhance the added value of products, improve product quality and material utilization rate, reduce energy consumption level, improve the excellent rate of products. In addition, for the development of new products and new markets, meeting individual needs will also help enterprises to improve their competitiveness and tide over difficulties.

In order to cope with the current Sino-US trade friction and prevent foreign trade products from being blocked out of the US market due to tariff barriers, Chinese companies can consider taking the following measures:

[1] Adoption of reasonable tax avoidance measures
Take advantage of loopholes in the taxation regulations to use imported raw materials to circumvent Chinese origin status. As the US-China trade friction is aimed at products with Chinese origin status, Chinese enterprises can also make use of China's non-preferential rules of origin, adjust the supply structure of raw materials, and use a certain proportion of imported raw materials and spare parts (China's non-preferential origin stipulates that the percentage standard of goods of Chinese origin is 30%, that is, finished products manufactured and processed using imported raw materials need to be added by more than 30%, in order to obtain the Chinese origin identity), so that the product can not meet the Chinese origin standards, to circumvent the product's Chinese origin identity.
It is also possible to export goods to the United States through transit with countries that have established free trade zones with both China and the United States. To enable preferential tariff treatment for both exports of goods to and through transit countries and then to the United States.

[2] set up branches, production lines and offices abroad
Direct investment in the United States to set up factories, so that products can obtain local origin status, or invest in countries with lower production costs that establish a free trade zone with the United States, so that products can obtain origin status in member countries of the free trade zone, so that products can enjoy preferential tariff treatment and are exported to the United States.
 
The key to overseas investment and establishment of factories is to make good use of the non-preferential rules of origin of the United States and related preferential rules of origin, so that the products from the procurement of raw materials to the arrangement of production processes, and even the nature, name, and use of the products reach the United States. Or the standards of goods of origin in member countries that have established a free trade zone with the United States. Especially in the case of the use of imported raw materials, must meet the "substantial change" criteria.
 
In addition, when making use of the rules of origin of the United States, one of the important criteria cannot be ignored: the cumulative standard. As most of the rules of origin under the free trade agreements signed by the United States have adopted cumulative standards, it is possible for Chinese enterprises to purchase raw materials at low cost in the free trade zone.

Seek help from trading partners
For those companies that work closely with U.S. trading partners, foreign trade companies can actively request U.S. trading partners, and they can make their own demands to the U.S. government and industry associations to safeguard the common interests of both parties. You can also turn to the bar associations in the United States, who usually have extensive experience in trade wars, for their technical support.
 
[4] Avoiding the risk of exchange rate fluctuations
At the time of receiving orders to lock the exchange rate for settlement, as far as possible to reduce the risk of exchange rate fluctuations, on the one hand, also actively increase the design and research efforts, with good quality design to increase the viscosity of products and users. Attach great importance to and do a good job of exchange rate hedging, closely track exchange rate trends, prevent exchange rate fluctuation risks, use RMB as much as possible in trade settlement, and avoid trade risks through settlement currencies.
 
[5] Development of diversified trade
Multi-point layout, disperse customer resources, diversify trade, and do not put eggs in one basket, so as to minimize the threat of potential risks.