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The challenges of decoupling manufacturing from China : Comments
By Murray Hunter, published 15/4/2025As corporation profits soared, the towns and cities that once supported these corporation's factories became desolate wastelands. America is full of 'almost' ghost-towns that have become ghettos for the unemployed.
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Posted by Banjo Paterson, Thursday, 17 April 2025 3:14:53 AM
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The first time Trump imposed tariffs on Chinese goods in 2018, it set off a scramble (among manufacturers who had long relied on China) to start looking for other options.
The first wave hit companies manufacturing appliances like refrigerators and washing machines, as well as mechanical and electric parts. They transferred factories to Thailand and elsewhere in Southeast Asia.
Next was renewable energy. The U.S. tariffing goods like solar panels also motivated Chinese companies to expand their supply chain in Vietnam, Thailand, and even Cambodia.
In the last months of Biden’s administration, the U.S. also put tariffs on goods imported from Southeast Asia, which destroyed investment there. So solar panel companies suspended operations or exported their products to other countries.
Under pressure from the U.S., some of the principal manufacturers of solar panels are now moving their production lines to the U.S.
Other companies are moving their production into countries that are not on the anti-dumping or countervailing tax lists of the U.S. Some are moving to Indonesia. Saudi Arabia and the Middle East have also become attractive. Some are moving to Oman and Egypt.
For electric vehicles, with Europe putting taxes on Chinese EVs of 10% to 30%, alternative examples are Chinese automaker BYD building a factory in Hungary. The Chinese EV company, Chery, is acquiring a former Nissan factory in Spain. Geely is signing a joint venture with Renault in France.
Since the 1990s a lot of U.S. manufacturing moved from China to Vietnam when labour in China became more expensive. Today, Vietnam has a $100 billion trade excess with the U.S., and China is still the main export country to Vietnam. This means that Vietnam has a trade deficit with China, and the U.S. has a trade deficit with Vietnam. The U.S. is aware of this diversion for Chinese goods to reach the U.S. Vietnam may be obliged to build a stand-alone supply chain to satisfy the U.S.
Taiwanese manufacturers are transferring some operations from mainland China to Vietnam on a trial basis, keeping their options open to transfer elsewhere if necessary.
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