Yahoo Finance The US-China trade war may ruin Christmas
Those rolls of gift wrapping paper decorated with Christmas trees, snowmen, and candy canes are one of the casualties of the U.S.-China trade war, even though the holidays are more than five months away.
“We’ve always said from a small business perspective that the longer this trade tiff dispute war goes on the broader the impact on the economy and small business,” said Karen Kerrigan, the president and CEO of the Small Business and Entrepreneurship Council. She told Yahoo Finance’s On the Move that plenty of people have gift wrapping paper left over from last year, “but the kids want all new paper” and a lot of that paper is made in China.
A report on Aljazeera.com highlighted the plight of Max Fortune LTD, a paper making company headquartered in Hong Kong with plants in China. The company calls itself “one of the leading paper products manufacturers that has a customer base ranging from Europe and North America to the Far East.”
It produces paper products like greeting cards, stationery and gift wrap. Seventy percent of its production is exported to the United States. But Max Fortune’s managing director told Al Jazeera that his factory is running at 60% capacity because of the trade war and he may have to move production to factories outside of China if it doesn’t end soon.
Gift wrap is included in the list of products currently subject to a 25% tariff by the United States Trade Representative. Yahoo Finance reached out to Max Fortune for comment and is awaiting response.
The global gift packaging market generated $12.2 billion in sales, the largest percentage of which took place in the U.S., according to a report published by research firm Future Market Insights, FMI, last fall.
A bigger problem for China right now
Hallmark reports $4 billion in annual revenue and is among the five global companies FMI identified as key manufacturers. The Kansas City-based privately held company declined to comment but Sarah Moe, Hallmark Card’s federal affairs manager, testified last month before the USTR and said, “There are some products that, for cost or capability reasons, cannot be made here. Many of those products are currently sourced in China.” She said it will take time for Hallmark to change its supply chain and exit China.
The trade war will likely become a bigger problem for U.S. as the holidays approach, but for now the challenges are more immediate and apparent in China, said the SBE Council’s Kerrigan.
Manufacturers like Max Fortune may move outside of China to produce gift wrapping paper and according to Kerrigan it is just a diversion and disruption that may be counterproductive for businesses.
“From our perspective, that hurts innovation that hurts growth. I mean that is time and money that should be going into growing the business,” she said, adding that manufacturers may not be able to ramp up in time for holiday demand in the U.S., opening a new front in the so-called war on Christmas, a trade war.
Adam Shapiro is co-anchor of Yahoo Finance On the Move.
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