Trade

Thanks But No Thanks

JM Ashby
Written by JM Ashby

Trump has called on American businesses to relocate their operations from China back to the United States and last week he called for offering tax breaks to do so, but almost no businesses are actually interest in moving.

The Chamber of Commerce surveyed American-owned businesses and found that only 4 percent of them are planning to relocate and those that are planning to move won't be moving to America.

Only about 4% of the more than 200 manufacturers surveyed by the American Chamber of Commerce in Shanghai said they will shift any production to the U.S., according to a report released Wednesday. More than 75% said they don’t intend to move production out of China, while 14% said they will shift some operations to other countries and 7% planned on relocating domestically and overseas.

Southeast Asia is the most common destination,” said AmCham Shanghai President Ker Gibbs in an interview. “Definitely not the U.S.” [...]

Trump renewed his threat to U.S. companies on Monday.

“We’ll impose tariffs on companies that desert America to create jobs in China and other countries,” Trump said.

One major reason why American-owned businesses aren't planning to leave China is because their Chinese operations are actually joint ventures alongside Chinese companies.

General Motors, for example, sells more cars in China than they do in the United States and they build them inside China for the domestic market in partnership with SAIC Motor. There's no reason for them to leave the largest consumer market in the world.

The next presidential administration and Americans in general are going to have to decide what kind of relationship we want to have with China while considering their abuse of human rights, among other things, but the bottom line is nearly 1.4 billion people live in China. China's middle class is larger (500 million) than the entire population of the United States (330 million) and leaving China means leaving a lot of money on the table.

Threading the needle between taking tougher stance on China's abuses while preserving our trade relationship is a delicate matter that Trump will never be able to manage. If he's reelected I expect he may actually follow through on additional threats to China and American businesses that operate in China. Trump could push us closer to an actual shooting war, not just a trade war. International trade prevents war by coupling economies and average people in both countries together. It's like Mutually Assured Destruction, but for the economy.

  • muselet

    More empty threats from Donald Trump, meant to be believed by the Red Hats, not the CEOs. Sort of like his recent claim that there are new auto assembly plants under construction all across the US because of his awesome awesomeness.

    As for the US’s relationship with China, that was always going to be tricky as China’s economy and economic influence grew. Unfortunately for all, Donald Trump has made it difficult for the US—and the rest of the world—to influence Chinese government policy and behavior. The next couple of decades are going to be difficult at best.

    –alopecia