1 week Ago By Joe Gallop
Australian consumers may emerge as unexpected beneficiaries of the escalating trade war between the world’s two largest economies. With the US slapping a whopping 104% in tariffs on Chinese imports, Chinese manufacturers are scrambling to find new homes for goods originally headed stateside. The result is that stock is now likely to flood into markets like Australia, pushing prices down across a range of categories from electronics to homewares.
Retail mogul Ruslan Kogan, founder of online retail giant Kogan.com, says the shift is already being felt. “We’re already seeing suppliers and manufacturing partners divert stock and capacity away from the US, and it’s pushing prices down,” Kogan posted on LinkedIn Wednesday.
The timing could not be better for Aussie retailers preparing for the end-of-year retail rush. “The next couple of months is when retailers place their large orders for the busy Christmas period,” Kogan said. “So the timing couldn’t be any better for customers looking to pick up some bargains this festive season.
” Billionaire investor Solomon Lew, who chairs Premier Investments (owner of Smiggle and Peter Alexander), echoed similar sentiments last month, pointing to global spare capacity as a potential cost advantage for direct sourcing operations. Myer, of which Lew owns nearly 30%, is also reportedly exploring a shift to direct sourcing in light of the changing trade landscape. Australian economist Justin Wolfers, professor at the University of Michigan, says: “We’re going to see Chinese businesses looking to offload product in Australia which is good for consumers.
There were also goods that the Chinese used to import from the US that they can’t anymore – are there markets there that present opportunities for Australia?” Potential Risks to Aussie Economy However, Wolfers and others note that a Chinese economic downturn could have negative implications for Australia. “This could cause the Chinese economy to enter recession. A Chinese downturn would have negative implications for Australia,” adds Wolfers.
ASX-listed appliance maker Breville and surfwear brand KMD Brands (Rip Curl) are bracing for pain, with US tariffs likely to dent profitability. KMD boss Brent Scrimshaw says the company is now considering re-routing inventory away from the US to avoid cost spikes. The global shipping industry is already showing signs of disruption.
UK-based shipping analysts at Drewry report a significant uptick in cancelled sailings from Asia to the US, while Lars Jensen of Vespucci Maritime says many US importers are holding off on shipments, hoping tariff conditions might change. If that was not enough, new US proposals could see Chinese shipping firms hit with hefty port entry fees – further jamming up global trade. Jim Wilson from Shipping Australia says these proposed fees could prove even more disruptive than the tariffs themselves, warning of potential congestion and delays at ports if ships begin to avoid the US altogether.
In a notable diplomatic move, Chinese Ambassador to Australia Xiao Qian has extended an offer of cooperation to Canberra amid the trade turmoil. “China stands ready to join hands with Australia and the international community to jointly respond to the changes of the world,” he told The Sydney Morning Herald , adding that Beijing is keen to maintain an “open and cooperative” relationship. Meanwhile, the Australian dollar has plunged to just above US60¢, its lowest level in five years, following China’s retaliatory 34% tariff on US goods.
Foreign exchange experts are warning of increased volatility as the trade war heats up. Rodrigo Catril from National Australia Bank says the dollar is “in no man’s land,” warning that things could “get worse before they get better.” Travellers and importers are expected to feel the pinch hardest, with the cost of international goods and holidays rising sharply.
With decisions on new US shipping fees due by April 17 – and the tariffs already in full swing – retailers, consumers, and trade partners are bracing for more twists. In the meantime, Aussie shoppers may just score some early wins, as Chinese goods originally bound for America start landing on local shelves – at knockdown prices..
