The so-called trade wars between the U.S. and China have affected businesses not only in Connecticut, but across the country. From 2018 to 2019, exports to China declined 11.5 percent and imports declined 16.2 percent, according to U.S. Census data. In the first half of 2020, imports from China declined an additional 17 percent. In part this is a result of the high tariffs both countries have levied — tariffs which remain on $370 billion worth of Chinese goods imported into the United States and $110 billion worth of American goods exported to China.
Paul Hebert, founder of the Manchester, CT-based Hebert Engineering & Design Company, for example, has been conducting business in China since 1996, but as trade relations between the U.S. and China have deteriorated in the last few years, Hebert said that his business has taken a hit.
Hebert’s company helps design and construct products like garden tools, clamps, medication holders, HVAC components and accessories for RVs. He builds the prototypes in the U.S. and then helps his customers contract with factories in China to manufacture the necessary components. His clients sell their products to Home Depot, Amazon, Lowe’s, Costco and other large retailers.
Hebert said that the combination of high tariffs and Covid-related uncertainty, has led some of his customers to get cold feet. Tariffs will cost any one of his customers about 25 percent of its profit, he said.
“It’s very, very counterproductive. This is money that [a customer] can’t invest in hiring people, [that customer] can’t invest in new development,” he said. “And of course that has turned around and had an effect on me, because now I have customers who are holding back when they shouldn’t be.”
China is Connecticut’s sixth largest trading partner, and exports to China are responsible for about 64,000 Connecticut-based jobs.
George Haley, a professor of marketing and specialist in East Asian markets at the Pompea College of Business at the University of New Haven, said that trade barriers on imports — which total about $2.3 billion for Connecticut — would have a far bigger effect on Connecticut businesses than exports of $942 million worth of goods and services to China.
Imports of steel and aluminum into Connecticut from China declined by $381.63 million between 2017 and 2019, the third largest decline of any state in the U.S.
In Connecticut, the manufacturing and aerospace industries, as well as the insurance sector, have been impacted by the U.S.-China tensions. Connecticut firms like Pratt and Whitney, Bigelow and Stanley Black & Decker have openly signaled that the tariffs are hurting their business.
On the other hand, Carlton Chen, owner of Sammi Sleeping Company in New Haven, said in an email that the tensions between the U.S. and China had not affected his business, but the coronavirus had. Chen manufactures therapeutic pillows, and he said that his business had been struggling with shortages of materials and high shipping costs. Chen said that the pandemic had also forced him to close his consulting business — helping companies with business in China — in March.
Dustin Daugherty, the head of North American Business Development at Dezan Shira & Associates, a pan-Asian firm that provides services to companies for investing in Asia, said that his firm has been encouraging companies to look to markets outside of China for quite some time.
Daugherty said that wage increases, along with difficulty dealing with local government, had created an incentive for companies to move out of China even before the current administration came into office. Today he suggests that his clients look into places like Vietnam or India as alternative markets.
Not all of the trade news was gloomy.
Paul Edelberg, a partner at the law firm Fox Rothschild, LLP and past president of the Connecticut-China Council, said that the phase one trade agreement that the U.S. and China signed in January has had some positive effects.
One positive result of the agreement is that it has pushed China to open its markets up to insurance and financial services companies. Before the pandemic halted travel, the Connecticut-China Council had planned for leaders from Jinin, the capital of Shandong Province, to visit Connecticut to learn about the U.S. insurance system.
But Edelburg also said that the agreement’s requirement for China to buy a certain amount of goods from the U.S. is vague, and hasn’t done much to address recent tariffs.
“It was a good thing that it stopped more tariffs coming in, but it didn’t get rid of the tariffs that were there,” said Edelberg.
This story was corrected to reflect that it is Hebert Engineering & Design Company