Trade War Takes a Turn for the Worse in China as US Companies Begin Leaving
China is finding out how costly a trade war with the United States can be.
With no resolution in sight for the dispute between the countries that kicked into gear in May, numerous American companies are planning to sharply cut back their manufacturing in the Asian giant in favor of countries that are not in the process of thumbing their noses at the White House, according to Fox Business News.
And with another round of tariffs on more Chinese imports in the offing, many more companies might be following their lead.
Fox Business News reported Thursday that Apple might be moving up to 30 percent of its production out of China into Southeast Asia. So Vietnam, a country that’s too often only mentioned in the context of “war” in the U.S., is turning out to be one of the beneficiaries of the trade war with China.
Besides Apple, other big-name companies such as GoPro, the camera maker; Hasbro, the toy and game maker; and the venerable tool company Stanley Black & Decker are also reducing their production in China because of the trade dispute.
The shifts don’t immediately benefit American communities. Most of the companies are eyeing countries where production costs are low without trade complications with the government of the world’s largest consumer market.
Along with Vietnam, India and Mexico are likely destinations for companies looking for a less confrontational atmosphere, Fox Business News reported.
Brooks Running, the athletic footwear and clothing company, told Reuters in May, near the outbreak of trade hostilities, that it would have to move production out of China.
The company would not be able to sell its products in the United States with the kind of markup that the tariffs imposed by the Trump administration on Chinese imports would require, Jim Weber, Brooks Running CEO, told Reuters.
He said the company made the decision in January, when the Trump administration was threatening to more than double tariffs from 20 percent to 45 percent, Reuters reported.
“We’ve had to make a long-term decision on this picture. It’s disruptive, but the reality,” Weber said. “So, we’ll be predominantly in Vietnam by the end of the year.”
Obviously, critics of President Donald Trump will be crowing that the trade confrontation is benefiting foreign countries manufacturing economies while raising prices on American consumers.
But those detractors are missing a point that the hard men in Beijing are no doubt appreciating.
China is a powerful country that’s growing dangerously more powerful all the time (and it’s not shy about flexing its military muscles), but it still relies on the United States.
For the Trump White House, the previous status quo where China enjoyed a trade relationship with the United States that allowed it access to the American market while restricting American firms from China, and engaging in intellectual property piracy — “forced technology transfer” is a dry term for it — all the while, was intolerable.
The current round of tariffs — $250 billion — is already costing the Chinese manufacturing, as the Fox Business News report showed. A new round on $300 billion worth of goods from China entering the U.S. is likely to bite even deeper.
No conservative likes tariffs as a tool of trade. But President Trump has shown little hesitation to use them as a diplomatic weapon.
That apparently paid off with Mexico and a step forward in the fight against illegal immigration. And economic measures have undoubtedly had an impact on the recalcitrant, murderous mullahs in the Islamic Republic of Iran.
Trump and Chinese President Xi Jinping are expected to meet later this month at the G-20 summit in Japan.
Maybe then we’ll find out if China has found out enough about how costly a trade war with the United States can be.
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