Business

Mid-sized American firms already moving away from China

December 5, 2019 9:48 am

American blue chips such as Caterpillar and Deere and consumer companies like toy giant Hasbro and Roomba maker iRobot have all been hit hard by trade tensions between the United States and China.

But many midsized US companies are realizing that they need to diversify away from China and have already begun to take action.

Middle-market companies have started to shift their supply chains to other parts of Asia and are selling more to other countries to make up what they can’t sell to China.

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That’s according to a survey released Wednesday by Portland, Oregon, based regional bank Umpqua.

Umpqua (UMPQ) surveyed 550 executives at companies with between $10 million and $500 million in annual sales in October and found that 72% reported levels of uncertainty about the future of their businesses due to trade tension with China.

As a result, more than half said they are looking to diversify their supply chains — both domestically and to other international markets.

And nearly 20% of the respondents said they are searching for new customers in other markets, primarily in Europe, and other parts of Asia, Latin America, and the United States.

Dale Darling, founder and president of Summit Premium Tree Nuts, an Umpqua commercial lending customer, told CNN Business that until a few years ago, China was the company’s largest market.

But the tariffs have changed that. The Chinese tax on almonds and other nuts imported from the United States jumped from 15% to 50%, Darling said. So Summit had to look for new customers fast and has made up for lost sales to China by selling more almonds, walnuts, pecans, and hazelnuts to India, the Middle East, and Spain.