Trade War Does Not Help U.S. Manufacturing To Return

One of the purposes of the US trade policy is to return manufacturing industry to US.

The United States expects the manufacturing industry to return to domestic production

One of the purposes of the US trade policy is to return manufacturing to the country, but the latest report shows that the return of manufacturing to the US is limited, and companies have accelerated the shift of production from the mainland to Vietnam and other low-cost countries.

Although China and the United States are going to come and go and impose tariffs on each other, according to the latest report of the management consulting firm KT Kearney, the US's imports of manufactured goods to the mainland and 13 other Asian countries increased by 9% annually to 816 billion US dollars in 2018. , The largest increase in the past 10 years, also exceeded the 6% growth rate of domestic manufacturing output in the United States.

The report shows that imports of manufactured goods in Asia accounted for 13.1% of domestic manufacturing output in the United States in 2018, which was higher than 12.7% in 2017, setting a record for Kearney's tracked data in the past 10 years. Kearney, a management consulting firm, pointed out: "The trade war has not led to a return. What we see is companies decentralizing manufacturing work in the mainland to reduce the impact of trade tensions and to respond to rising labor costs and other risks in the mainland."

Because the United States has raised tariffs on imported products from mainland China, resulting in increased product parts costs, some American companies can only suspend or postpone their plans to expand production in the United States. Some companies have started to adjust their supply chains, moving part of their production to Vietnam, the Philippines, Cambodia, and India. Transferring production lines can take several months, and sometimes logistics and other problems can occur. Although labor costs in some Southeast Asian countries are relatively low, their logistics infrastructure and factory capacity are not as good as those in the mainland.

According to the report, the mainland is still America's most important Asian importer, accounting for about two-thirds of the US$816 billion. However, the proportion has been declining in recent quarters, because US companies rushed to stock up and prepare before tariffs were imposed at the end of 2018, and some companies accelerated their production in other low-cost Asian countries, such as Vietnam. Five years ago, the mainland accounted for 69% of America's imports from Asian countries.

Mexico has also benefited from the Sino-US trade war. In 2018, exports to the United States increased by 28 billion U.S. dollars, an increase of 10% from 2017.
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Reference: chinatimes