Thought Of The Week

Market Alert: Protectionism on the Rise.

International marketers need to watch the current trend of protectionist tariffs that are increasing around the world and coming to a head just before the Group of 20Summit in Pittsburgh, September 24-25.

While no one disputes the need for global expansion and the tremendous lift and leverage it can give any company’s bottom line, trend-spotting and the proper strategic positioning that responds to these trends are critical.

The major headline here has been the tariff the U.S. government is placing upon Chinese automobile tires and China’s reaction of taking this issue before the WTO. The proposed tariff increase of 25%-35% could price out of the market 17% of all tires sold in the U.S. China says this could affect 100,000 Chinese jobs. The price of rubber on world commodity markets and share prices in certain tire companies has already been affected.

U.S. companies are coming under increasing pressure from their unions and labor forces to stem the flow of products flooding into the market from China and elsewhere. The U.S. government meanwhile is walking a tightrope as the Chinese and U.S. economies are so tightly intertwined now. China will be watching very carefully how the Obama Administration reacts as this could set the tone for the remainder of Obama's term.

It may be a hackneyed phrase but “tip of the iceberg” seems appropriate when looking at the global protectionist trend. There is much more to follow. GTA’s research indicates over 100 protectionist measures are due to be implemented around the world. Countries being targeted the most by these measures are China, U.S., Japan, Germany and France. The leading industries seeking protection are machinery, food, financial services, and agricultural goods.

If your products/services may be affected by this, it is time to pay close attention.

For more information on this, international marketing logistics, regulations, market entry strategies, please contact doug@focus-worldwide.com.