Battle to stop coronavirus could impact US economy

ByDavid Louie WPVI logo
Tuesday, February 4, 2020
Battle to stop coronavirus could impact US economy
No one knows yet to what extent the coronavirus will disrupt exports from China to the U.S. and the economy.

SAN JOSE, Calif. -- No one knows yet to what extent the coronavirus will disrupt exports from China to the U.S.

However, the stakes are high. By some estimates, 90% of our vitamin C, 70% of the apple juice and a quarter of the garlic consumed by Americans comes from China.

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The low cost of manufacturing in China has helped American consumers stretch their budgets. iPhones, electronic parts and clothing are just some of the goods we see on shelves bearing the label, Made in China.

97% of the antibiotics used in America are made in China.

However, in an effort to contain the novel coronavirus, China has extended the Lunar New Year holiday, delaying factory workers' return to work.

Major cities have seen transportation halted.

If the outbreak grows and work furloughs continue, that could impact exports to America.

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"We could see shortages," said Prof. Robert Chapman Wood, who teaches strategic management at San Jose State University. "We could see a decline in the Chinese economy that would ripple to other economies. We could see declines in Chinese purchases. Lots of things could go wrong."

He and other business experts say two factors will determine if there's a supply disruption: How bad the coronavirus gets and how prepared companies are with backup plans.

Planning should have started as U.S.-China trade tension developed some time ago.

"They've had about a year or two to be living under this cloud of uncertainty and to be putting plans in place, and probably right now, they're just starting to execute against some of those plans," said Prof. Andy Tsay, a supply chain disruption expert at Santa Clara University.

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Shortages can mean price increases over the long term once goods already in transit from China to ports like Oakland are exhausted.

"Yeah, I'm concerned because I know a lot of the things in America are from China, so that is concerning," said San Jose resident Michelle Vargas on her way into a Target store to shop. Does she think the coronavirus situation could drive up prices? "Absolutely," she said.

An estimated 37% of the cargo passing through the Port of Oakland is either coming from or heading to China. So the battle against the coronavirus could impact the health of our economy.