Trade

Factories Leave China for TPP Countries Because of Trump’s Trade War

JM Ashby
Written by JM Ashby

Trump's trade war with China has impacted about a third of the total business of electronics factories in America according to a survey conducted by IPC, the Association Connecting Electronics Industries, and this is prompting some firms to leave China, but they're not leaving for America.

Trump's trade war has cut investment in the United States and shipped business to other countries that we don't have a comprehensive trade agreement with.

We don't have an agreement with them because of Trump.

The survey from the IPC, based in Bannockburn, Illinois, found that one in five companies with U.S. operations said they were investing less in the United States due to the new tariffs. About 13% said they were cutting hiring or reducing headcount.

“It seems clear that loss of profitability is impacting the ability of these companies to invest in the U.S.,” said Shawn DuBravac, IPC’s chief economist.

DuBravac said many association firms had indicated they were leaving China, but “it doesn’t appear from our results that a lot of that is flowing back to the U.S.” Rather, the focus is on moving to other low-cost countries, including Vietnam and Malaysia, he said.

Trump's trade war has slightly reduced our trade deficit with China, but our overall trade deficit with the rest of the world may still weigh in at a record or near-record high this year because, at the end of the day, American consumers demand cheap goods and businesses will do whatever they can to deliver them.

Trump has boasted that American firms are leaving China, but that doesn't mean they're coming home to the United States.

Ironically -- and more often than not -- firms are leaving China for countries that are members of the Trans-Pacific Partnership (TPP) that Trump unilaterally withdrew from after taking office.

Malaysia and Vietnam are both members of the partnership which was renamed to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CBTPP) after the United States withdrew.

There's nothing funny about this, but I can't help but laugh a little bit much the same way I will occasionally laugh at a dark comedy.

  • muselet

    I wonder if Donald Trump realizes that withdrawing the United States from the Trans-Pacific Partnership didn’t invalidate the agreement among the other countries.

    If I had to guess, I’d guess “no.”

    –alopecia