Challenges of Implementing Chinese Import Tariffs

David Rashid, the head of US autoparts manufacturer Plews and Edelmann, faced significant challenges when his company began losing market share to Chinese competitor Qingdao Sunsong, which offered power steering hoses at lower prices. The situation took a turn in 2018 when the Trump administration imposed tariffs on various Chinese goods, including autoparts, leading Rashid to believe that these tariffs would compel Sunsong to increase its prices. However, contrary to Rashid's expectations, Sunsong managed to maintain its pricing despite the 25% tariff. This unexpected resilience raised questions about how the Chinese company could absorb such a significant tax without passing the costs onto consumers. Rashid's struggle highlights the disparity between the theoretical impact of tariffs and their real-world implications in the competitive landscape. Determined to uncover the mystery behind Sunsong's pricing strategy, Rashid embarked on a quest that involved international detectives and forensic chemists. This journey not only aimed to understand the mechanics of the tariff system but also fostered a unique friendship rooted in a shared passion for hummus, illustrating the personal connections that can emerge in the business world. The story, produced by Emma Peaslee and edited by Molly Messick, sheds light on the complexities of international trade and the unpredictable nature of market competition, emphasizing the challenges faced by American manufacturers in a global economy.