The intended purpose of opening more American factories is a Trump pipedream. The intent of Companies is to maximize profits utilizing cheap labor. And who wants to work for peanuts here when all we have been working for isn't far from that now?
1
I have come to the conclusion that there is alot of mass-produced junk (all made in china), that if it disappeared overnight, none of us would notice it was gone. China stands to lose if companies move production out of China, as then there will be a large amount of unemployed workers. The Trump crowd yells bring back manufacturing, but I’m afraid they have an antiquated 1950’s view of manufacturing. With environmental regulations being overthrown and labor rights under attack, I suspect if manufacturing did return to America, it would look more like what China does now rather than good paying Union 40hr work wk manufacturing jobs. Perhaps that is the larger end game here anyway.
4
Just wait until the GOP has to swallow a large cost-of-living increase for Social Security recipients in 2020 -- once the impact of tariffs (along with fuel cost increases resulting from the Iran trade embargo) have caused a big jump in the Consumer Price Index.
We'll all be deafened by their howling about "entitlements".
Meanwhile, the next recession will be starting due to reduced consumer spending (due to higher prices)....
And, someone will invent the derogatory term for these effects -- perhaps "Trickle Down Tariffs" ....and/or, "Trumpflation"...
1
Yesterday, the Chinese government published a white paper to clarify the facts about China-U.S. economic and trade relations, demonstrate China's stance on trade friction with the United States, and pursue reasonable solutions.
"China does not want a trade war, but it is not afraid of one and will fight one if necessary," Beijing said in the document. "We have a highly resilient economy, an enormous market, and the hard-working, talented and united Chinese people. We also have the support of all countries in the world that reject protectionism, unilateralism and hegemony."
"The US government has taken extreme trade protectionist measures, which have undermined the international economic order, caused damage to China-US trade and trade relations around the world, disrupted the global value chain and the international division of labor, upset market expectations, and led to violent swings in the international financial and commodity markets. It has become the greatest source of uncertainty and risk for the recovery of the global economy."
Of all the very terrible and far from "the best" people that Trump has filled his administration with, extremist economist Peter Navarro is now vying for the mantle of WORST advisor.
Because as bad as Navarro's own ideas are, he is a stubborn yes-man who actually claims his "function, really, as an economist is to try to provide the underlying analytics that confirm his [DJT] intuition. And his intuition is always right in these matters."
1
This piece gets to the heart of the trade issue-labor costs. That is the driver that forces companies to move manufacturing to low-labor cost countries, along with our desire to seek the lowest prices for the goods we seek. High profits keeps the Wall Street croupiers at bay.
Second thought, with many laborers who were willing to perform the somewhat menial tasks that some products require in other countries, who in this country, the United States, is willing to take that type of work?
1
There is a giant disconnect between what American citizens are willing (and able) to pay for certain goods and what it costs to manufacture these goods in the US. The reasons for why it costs more to manufacture in the US starts with the cost of wages, and ends with the cost to the environment. Topping it all off it the profit that these companies can make--oh so much more profit to be had making this stuff overseas where wages are nil and environmental laws are nonexistent.
It will never be as profitable to manufacture most things in the US.
3
As this makes clear, and a few people note, the only thing Trump's destructive / self-destructive tariffs are going to do -- aside from helping a few countries move their manufacturing bases up the value-added chain -- is hurt BOTH China AND the US
The reason is the US and China are interdependent parts of THE SAME ECONOMY -- what has been called "Chimerica"
Given this, the main aim of US / China relations should not be a self-mutilating chain reaction of insults and injuries, but managing the situation to maximize the benefits to as many stakeholders in BOTH countries as possible -- including workers as well as consumers and corporate titans
This has and could never have been a simple task, but it is vital -- the only alternative being the "New Cold War" the Times noted a few days ago.
In this context, any military encounter will only add to the economic tensions
China may dominate the South China Sea strategically, but that domination is useless -- any real encounter will quickly ratchet up the escalation ladder into a war that will, again, hurt BOTH countries
Given these realities, it would behoove the Democrats to stop their gutless "me-too-ism" of Trump's self-destructive anti-China insanity
China is NOT the cause of US economic problems -- a "Wall Street gone wild" is
And even if Americans persist in their ahistorical amnesia, the Chinese will remember what the Democrats did -- and didn't do -- when Trump started this madness
3
None of these companies think about moving manufacturing to the U S A only to other cheaper locations.So Mr Trump how does that increase jobs in the USA
1
Much easier to carry on making in China and pass on any extra costs to American consumers. And many of the products mentioned in this article are low tech stuff like handbags. If its intermediate goods that are ultimately incorporated in products assembled elsewhere the risks are enormous.
1
While Trump may with his tariffs succeed in moving some business out of China perhaps effecting their economy, it seems that his belief that that will force manufactures to open factories in the US is seriously clueless. What he will do is help some 'third world' countries develop more (not all bad, certainly, IMO). Making China stumble, which does seem to be one of his desires (does the man actually have 'goals'?), will ultimately have a negative effect on the world/US economy. Helping job development in places like Cambodia will do nothing to create American manufacturing jobs.
International companies have seen clearly that China has a huge internal market and reliable long-term policies. Trump has marginalized the US and made the US operations of these companies a backwater. They will focus on their outside operations until Trump and the GOP Congress are removed.
1
This will blow up in Trump's face just in time for the next Presidential election.
1
We are enriching an enemy, that is extremely dumb. China's goal is to take our place in the world. Only when they do step in it will be by backing countries at abuse their people, that have no worker safety controls and no environmental controls just like they do.
Trump's methods are crude and will hurt the economy, but the overall goal of moving our business away from China, is strategically, a common sense move.
Tariff war is a stupid and pointless way to address a chronic problem, which needs to be addressed in a more rational way. Our problem is that, since the US dollar is used as the international unit of exchange, other nations seek and hoard dollars from imbalanced trade with the US. Our currency is overvalued in exchange because it too often is sought, not to buy compensating goods and services in of from the US, but to fund expanding trade between other developing or developed nations. This leads to disruption of our own industrial base, for no good reason, and does us long term harm. Our rust belt cities are evidence of this.
There are two way to deal with this, in my estimation. The first (and best) is to insist on the development of some other international currency against which the dollar, like other currencies, can fluctuate to correct imbalance of trade. The second (perhaps as a stop gap measure) is to grant US exporters dollar trade credits, that US importers must buy before releasing equivalent dollars to pay for imports. Either one or the other must happen. This chronic imbalance cannot go on! It is far too disruptive to our manufacturing base!
1
Can we talk? Do the citizens of Trumpistan understand what a 'tariff' is? It's a tax on consumers. American consumers. Like the Trump voter demographic that shops at Walmart. Like the tens of thousands who work at Walmart and don't earn enough to get their noses above the poverty line and must rely on taxpayers to subsidize Walmart profits by providing food stamps and subsidized health care to Walmart's employees. Like the tens of thousands of 'third world' workers who produce the mountains of cheap goods that comprise those 'blue light specials on aisle 7.'
Falling prices, my behind.
The 'Tax Cuts and Jobs Act' passed out about $1.5 trillion in new tax breaks. Dribs and drabs of that $1.5 trillion will go to members of the professional and working classes. The overwhelming majority will go to corporations and extremely wealthy individuals.
With these tariffs, the 'dribs and drabs' -- and then some -- will come right back out of the pockets of Americans who buy everything from clothing to shoes to food to you name it. American corporations won't eat those tariffs - they'll pass them along to you and me.
And in case nobody noticed, after-tax corporate profits took a fantastic, historic 16% year over year leap after the tax cuts took effect. How much of that was shared with 'the little people'? Well, wages are up 2.9%, which coincidentally is also the rate of inflation.
Keep running as fast as you can - you may almost manage to stay in the same place. Huzzah! MAGA!
1
If a company moves their final assembly to Vietnam so they can import final products with no tariff but they still make all their parts in China, then that company only cares about greed and the bottom line, and not actually the well being of the American citizen. I would support boycotting such a company.
As soon as we start defending multinational companies greed as necessary and a good thing, then we have lost the trade war and the battle for the soul of America. If we lose this trade war because of our own greed then I'll know that America is going to fall and that I should stop caring about my fellow citizens and ONLY care about my bank account. Believe me, if I stop caring about people I can definitely learn a lot from Chinese business practices since I will have to emulate them to survive. Lying, corruption, and money will be my tools to power, and I will use them to undercut my fellow citizens to ensure that I have money and power. I wont even consider my fellow citizens people, just consumers whose only purpose is to rip off as much as I can. America will become China, and I will make sure I am on top and that my greed is more than anyone elses. Because under the Chinese system greed is the path to power and riches, and consumers are just chumps who my goal is to fraud and steal their money.
If you want China to come to the bargaining table, just boot Chinese college kids OUT of American STEM universities.
China KNOWS it still needs American education to drive STEM development, if only for the next 10-15 years.
And BONUS- you'll have more seats to actually educate American kids who can then support all the illegal aliens using our emergency rooms and social services.
@Joey - American universities, particularly public universities, have gone to great lengths to attract Chinese and other foreign students. Why? Because they pay premium tuition and have become little walking talking profit centers that help to subsidize the American students who also attend. Which in turn has become necessary because our benighted federal and state governments have slowly strangled funding for public universities, in favor of tax cuts for the rich and the world's most bloated military budget.
But hey, not to worry. "I love the uneducated," remember? Heck, our kids can all go to Trump "University" or similar for-profit cons, now facilitated by the rollback of regulations to prevent such scams. It's all part of god's plan, haven't you heard? Just ask Secretary of "Education" DeVos.
4
Fewer Wal-Marts and dollar stores selling cheap plastic trinkets made by slave labour only to wind up in the ocean or a landfill.
A bit of hope for the world.
1
As a product developer of 30 years, Most of my clients are small businesses that employ an impressive amount of Americans (believe it or not). Right now, there's not one of them that is not in serious trouble . I can understand all the positive reaction to the tariffs. Sure China has not played fair and we are at fault for allowing that to happen. But slapping a 10%(25% in January) tariff is only punishing the American businesses and by extension, the American Public.
First, let's start with the small businesses, you know, the ones that collectively employ the largest workforce in the nation, to impose 10% or more penalties during peak season will gravely hurt these US businesses, as it will take years for US companies to develop reliable supply chains from "other countries". I know this from personal experience and it pisses me off to see the talking heads tell its viewers how easy it is to switch to a different country! Further hurting US business is that the goods landing on shore now were negotiated with their suppliers and customers 6 months ago. so, there’s no way for small businesses to allocate an additional hit of 10%. The stock market has so far reacted positively to the news of 10% thinking this was a light hit. Just wait until Q4 earnings reports come out and by then, the damage will have been done. Punishing US businesses will not bring back cheap stuff manufacturing jobs.Focus for tariff protection should be directed towards our big ticket items .
1
What's really ironic with this exodus of labour intensive manufacturing to S/E Asia and other countries is that it'll perfectly marry China's One Belt One Road initiative. As China's manufacturing and economy evolves. it naturally will slash these labour intensive work to elsewhere. The OBOR infrastructure development through surrounding developing countries in S/E Asia and the sub-continent will but naturally expand and support this supply chain to those new manufacturing hub. All remain integrated to the Chinese economy. Trump administrations tariff war has but hastened this path and increased the urgency of OBOR for all involved. It's not retarding China's economic development but accelerating it. What were they thinking in the WH!
1
The simple thought behind Trump’s trade war is that manufacturing will return to America if tariffs make Made in China too expensive. This article shows that not happening but Made Someplace Else, or at least the final labels applied are.
China prospered because American CEO’ers saw rising profits in cheap foreign and Chinese business people are world wide the people who do business, added at home by a supporting government. The new foreign sites are likely Chinese owned as Foxconn (Taiwanese owned) in Vietnam and now in proposed USA sites.
Is there a lesson here? America played the innovative efficient quality producing role once and even paid its labor force accordingly then the ideology changed and needs to change again. Its not all economics.
1
A friend, a director-level employee with an engineering background who has worked with multiple multinational companies in various capacities, but has been primarily based in the US sees it this way: Manufacturing in the US is a nightmare: at our facility our only requirement for a assembler was a high school degree, US citizenship, passing a drug and criminal background check and then passing a simple assembly test: looking at an assembly engineering drawing and then putting the components together. The vast majority of Americans were unable to complete the assembly test, while for our facility in China they completed it in half the time and 100% of the applicants passed. An assembler position in the US would average maybe 30 interviews a day and get 29 rejections, not to mention all the HR hassles of assemblers walking off shift, excessive lateness, stealing from work, slow work speed and poor attitudes.
1
@godfree
And the 'worker' was hired through a gig hiring agency that took a fee and does not remember his name and was paid a wage fixed by some CFO at a level just needed to attract the desperate, and he/she may also be holding down another job.
Where did the American working class go? They voted for the smiling actor and never recovered from his view of America pushed forward by his successors.
The ratio between CEO compensation to average worker soars from 25:1 in 1970 to 335:1 in 2015.
4
I thought China held a lot of the US how many trillion dollar debt? No body mentions that. If this is still true will somebody explain why this is not leverage for China over the U S?
1
@joyce
China has converted its foreign trade surplus into US Treasury Bills as safe investments, the role they play for many. By unloading those it could affect exchange rates to its disadvantage. Not likely, but is a weapon if needed.
It’s a misconception that if China were to sell their holdings of Us Treasuries, they would drive up the value of their currency versus the USD, thus defeating the purpose of their sale in the first place. This misconception implicitly assumes that if China were to sell their holdings of Treasuries, they would also need to convert the USD into CNY. The assumption is false. China can simply sell their Treasuries holdings without converting their USD into CNY. All they need to do is to leave their USD in bank deposit. Alternatively, they can sell all their holdings of intermediate and long dated Treasuries and reinvest the cash in Treasury bills. This would have the effect of driving up long term interest rate in the US, thus hurting the US economy at a time when the US fiscal deficit is expected to deteriorate significantly. For their maneuvers to be more effective, they can make their sales of Treasuries high profile. When the market sense that this is what China is planning to do, the market will no doubt rush to sell because nobody can afford to be the last to be out of the exit when the largest holder is selling out and when more supplies are going to hit the market. If China were to do that, the US economy could be in serious trouble and the only way to counter that would be for the Fed to start another round of QE to be the buyer of last resort. The problem is that unlike previously when inflation was really low, this time round inflation is heading up.
I wonder if these companies are considering how China will view their abandonment at this time? They might move their factories now; there may be consequences for them further down the road, if/when China becomes the biggest consumer economy in the world.
1
@Shaun Narine
Not expected until 2025. By ppp measurement already there, but US will stay ahead in per capita income for many years to come.
Given that Trump has had 6 bankruptcies in his lifetime after inheriting millions, and the recent Op-Ed, and the Bob Woodward book, and all of Trump's documented lies, and the fact that his treasury secretary Wilbur Ross is likely making money on the tariffs and the fact that even his own FBI appointee thought he may be unfit, I am not trusting his judgement on these trade deals.
Remember when he called on Americans "to pay higher prices for a while because he thinks it will be worth it if he gets concessions from China and the E.U"?
Remember when he said “So in a certain way, I call people patriots because … short-term you may have to take some problems. Long-term, you’re going to be so happy. You’re going to be so happy.”
The problem is that Trump doesn’t know what he’s doing and he has fringe economical advisors who are not allowed to disagree with him.
Get ready people. We are going into bankruptcy #7.
12
I think that we may have to be willing to pay more for products so that we can be ensured that they:
1. Are high quality and didnt pass inspection due to the corrupt business practices in China.
2. Are made to the specs that the spec sheet says
3. That are made by workers who aren't abused, underaged, or dont receive any benefits.
4. That aren't subsidized by the Chinese government to artificially lower prices.
5. That are made with the environment in mind and not just polluting our earth to the max in the name of cheap prices and efficiency.
The only way we will lose this trade war is if we let American greed win out. If we let our greed win, we will lose. It's as simple as that. If we keep our fellow Americand in mind and not just our own bank account numbers, we will be able to win this trade war and make China change. If we let our greed win out then we may as well prepare for a future where America operates just like China does.
7
Greed? Have you checked out all the 501(c)(4) “social welfare organizations" that are buying our politicians with dark money? Greed just exponentially went through the roof with Citizens United ruling. Our SCOTUS is bought and paid for.
2
Mr. President,
You were not my choice, but you are president of this country. Instead of "wins" that highlight Republican leadership, how about policies that will positively affect America long term? So everyone got a tax cut. I don't see that government has appreciably diminished in size; you run through staff like most people run through, well I think you know where I might be going with that reference. And WHERE is that infrastructure bill? A tax cut gives people a fish, while providing jobs via infrastructure which helps your economy, your precious unemployment numbers and is REAL change for the middle class. Now THAT'S teaching people how to fish. If you want to get China's attention, out-produce it, stop subsidizing their businesses and build in places like Cambodia since you're not enforcing bringing business back home. You pull that off you'll get votes that might surprise you. But you won't do that; doing so would require, gasp, bipartisanship (the HORROR). Stop talking so much and DO YOUR JOB.
2
Herein is the problem with globalization. How much pollution is generated by having umbrella handles made in Italy matched to Taiwanese fabrics assembled in a Cambodian factory? Time for a carbon tax that reflects (and kills) this globalized supply chain.
6
... but few places can match China’s convenience and reliability.{
Not so !
Germany, to name one , can do printing circuit boards, injection-molded plastics, screens and modules and anything on the list with German quality and precision
And it is a shorter trip across the Atlantic than across the Pacific
What German workers are NOT willing to do is to work at or below Chinese wages.
That is what is all about. A world wide race to the bottom of the wage scale
In a global society with free trade, employment will flow to those willing to work for least.
24
and China ain't all that cheap anymore. It used to be, but look at productivity, shipping and now tariffs.
The jobs aren't coming back to the US regardless of tariffs. It's low wage workers that corporations are looking for - all the tariffs will do is give more production to other far eastern countries such as Cambodia. China will keep the tariffs on US goods such as soybeans and pork hurting the farmers. How is this a"win" for the US?
1
When decent manufacturing jobs started moving overseas, and, coincidentally, during that time when unions started coming under attack here in the U.S., justification for those changes centered around the fact that all those foreign made items we were purchasing were costing us less, thus there wasn't the need for those higher middle class salary manufacturing jobs.
So .. Now that those changes are out of the way, the words I've been hearing for justifying these tariffs, tariffs that will drive the cost of those lower priced items ever higher, centers around the need to pay for those big tax cuts that congress gave us (pittance for most of us - BIG cuts for the upper 2% of us).
To me, it's beginning to look like the definition of making America great again means making America great like it was during the time of the late 19th century robber barons.
16
“The average Chinese factory worker makes roughly $10,000 a year, the official data shows. By contrast, the minimum wage for Cambodian garment workers amounts to about one-fifth of that.”
I can see why Donald Trump thinks our trade relationship with China is so bad that he’d want to remedy things in China’s favor. The man is a true visionary.
3
So Trump's tariffs aren't forcing manufacturing jobs back to the US but are instead driving manufacturers to countries where labor is even cheaper. I'm surprised that our "stable genius" fake president didn't see that coming. This tactic by manufacturers will make American labor even less competitive ultimately driving even more jobs offshore. This could go on for decades, maybe centuries, until all of the undeveloped world has evolved economically to where all 3rd world labor costs are at parity with the west. And in the mean time costs and prices go up here resulting in inflation, less disposable income, fewer jobs, and... recession. Then we elect the Democrats to fix it.
7
But wait...how is moving manufactoring from China to Cambodia (or any other non-US country) helping to make America great again? I thought Trump promised to push American companies to manufacture in the US and not overseas. The tariffs are not creating American jobs - it’s just moving the money from one room of the house to another instead of back home for American workers.
13
There is an assumption that if the US doesn't buy China's goods, China will automatically be hurt. All this means is that if the US isn't buying, the Chinese products will be more available for the rest of the world. China's burgeoning economy and modernism are not going away. Plus, they know how to suffer through temporary economic downturns quite well.
7
“People are desperate to get out of China,” said Spencer Fung of Li & Fung.
This is the best of news of the week.
The movement of manufacturing to Vietnam, Cambodia, and Philippines shows that the TPP wasn’t actually necessary. The same goal is now being achieved simply by raising tariffs on China.
Smaller Asian countries are better offshoring options than China, since they will not convert trade surpluses into challenging the U.S. militarily. Hopefully the supply chain managers are looking closely at Mexico, El Salvador, Guatemala, Honduras and other Central American countries. Just a modest shift in manufacturing ther could have a big stabilizing impact on countries that are flooding the U.S. with low-wage illegal immigrants.
Lastly, some manufacturing can be moved back to the U.S. where a combination of automation, low energy costs, and faster logistics can make it feasible.
The bottom line is that China has firmly established itself as a U.S. adversary. As such, large trade deficits with China pose a national security threat to the U.S. This alone justifies the tariffs that the Trump Administration has placed on them.
Fortunately, the intended shift is now taking place.
10
@John Plenty of those Central American options you mention are not exactly stable regimes or they are rather repressive regimes.
"Still, China remains an efficient place to do business." In other words, if the workers demand more or strike, the Chinese government will make sure those organizing will disappear and reappear as organ donors.
7
buying cheap goods from China and third world countries is the equivalent of the Manchester textile factories buying cotton from the slave plantations. Exploiting people s misery to have I phone s and sneakers is immoral. Maybe trump is the moral one in this Situation. When u buy something at Walmart s. Think of the misery that impacted the person who made it so you can save a few dollars. Do you need 6 pairs of shoes?
12
What's this about China's "convenience and reliability"? Is that a slam against U.S. workers?
6
@B. Granat
It is a slam about our infrastructure. When I read the article, I got the impression that China has spent a lot of money on infrastructure while we here in the U.S. have watched our crumble into disrepair.
1
I have said for years that Americans would really miss the deeply discounted goods we buy from China when China decided to stop practically giving the goods away.
Never crossed my mind that our president would try to kill the bargain basement prices for them.
We will miss you cheap everything. All the more because without unions manufacturing jobs won't be worth the trade.
26
@Linda Kelly No worries, plenty of other poverty stricken countries to exploit
I'm a little confused. Mr. Holten, who moved his business making stuff for Burberry and others from China to Cambodia in 2010 is actually complaining that he had to spend $960k to build a factory from scratch which included solar, water purification, and off-grid power?
In San Francisco his $960k would get you an 800sf condo in the Tenderloin. In Seattle, you'd do a bit better - perhaps 800sf on Capitol Hill. In New York, you'd have to settle for a Bowery subterrainean 400sf'er.
I think Mr. Holteen did quite well.
26
So instead of jobs moving back to the USA, like Trump promised, they are moving to other low cost countries. Looks like Trump is making other countries great.
31
This article gives the questionable assumption that China is the Middle Kingdom where if anything is not produced by China, it can't be produced elsewhere. The article contradicts its own bias by failing to disclose the fact that 30 years ago, the vast area on which China's bulging hi-tech industry sits was nothing but rice paddies and swampland. Businesses seek to control costs and increase profits--that is the logic of capitalism. It is that logic that will drive businesses to do whatever they have to in order not to become some rival business's meal. The same logic does not one whit about the convenience of supply chains or transportation networks.
5
I wonder if we are the only recent refrigerator buyers to experience multiple delays in receiving our merchandise. And as we wait week-after-week without a firm delivery date for a fairly common and everyday model, we’ve seen prices rise by $300 to $500 and anticipated delivery times extend into December at some merchants.
I can remember a time when you could get one of these standard appliances in just a few days.
We can imagine manufacturers delaying shipments as they hunt around for new parts suppliers less-affected by tariffs. We can’t help thinking that Trump’s trade war has thrown a monkey wrench into the supply chain and we are one of many victims.
8
@LIChef
I suspect there will be plenty of price gouging, opportunism, and finger pointing to go around as part of this whole ugly mess.
4
@LIChef
This is worrisome. Inflation is scary but not being able to obtain necessary items is worse.
2
China has built itself into a manufacturing powerhouse on the backs of the American worker and taxpayer. The trade deals of previous administrations, accompanied by the illegal contributions the Clintons and others have received from the Chinese, either directly or indirectly, have sold American labor down the river and cause the economic stagnation we've been experiencing for decades.
While tariffs may force us to pay more for Chinese imports, to the Chinese government it is a direct threat to their stability. Prediction: The Chinese government will capitulate on its absurd currency controls at some point, before the internal uprisings begin.
Its a dangerous game that should have been played a decade or two ago.
9
@Samuel Wilson. I agree with everyone except for blaming the Clintons for this. The Clintons are at best opportunists and grand-standers. The Republicans on the other hand, starting with Reagan and co., are entirely responsible for the destruction of American labor. To the republicans, labor is something that must be squashed at all costs even it means outsourcing American jobs and know-how to our strategic adversary. China has interpreted our generosity as our weakness. It is time to take down the Chinese economy.
14
"As tariffs begin to make China look more expensive, many companies are considering cheaper places to make their products, like Vietnam, Cambodia, Bangladesh and Ethiopia."
EXACTLY. Not West Virginia or Michigan. Unless American factory workers are ready to accept $0.60 an hour with no health benefits or safety devices, they'd better accept the cold, hard reality that these jobs are never returning.
All these tariffs do is shift final assembly of Chinese components to somewhere like Mexico, avoiding the tariffs, but doing nothing for working families in the U.S.
31
Oh, and what I forgot to mention is that: despite all these fantastic values/wages etc. (COLA adjustments incl.) Is a simple minded way to level most playing fields: what is the price of a Kilo of butter (i.e. cost implicit in how long one must work for that money)
This is the best way to make a decision whether or not to sell that California property and start a factory somewhere in Southeast Asia.!
1
Notice that the alternatives to China do not include anywhere in the US. The future will continue to move forward, ignoring the political slogans of those who thought they ever were Great.
25
In China, with the declining young population who are quickly losing interest in any assembly line work, it's quite natural to move labor-intensive works to other places. Meanwhile Chinese must move up in the line of work.
The same has taken place in Japan. However, the trade deficit simply is moved from China to another country. How does new tariff help American workers?
12
@yifanwang
"Meanwhile Chinese must move up in the line of work."...
Which is exactly what Americans were told at the advent of the whole globalization, China, NAFTA era. We were supposed to have greater trade and economic opportunity, Instead, we ended up with garment, furniture, and steel industries decimated. We've seen community blight and an enormous drug crisis while watching spiraling trade deficits and incurring massive debt both public and private.
If anything, at least the Chinese have our dismal record of how "not to deal" with the problem effectively to learn from.
8
@Charles
You can still buy American made furniture, it is readily available. But you won't get a room full of furniture for $2000. Maybe an ottoman or nightstand, but not a room full. Same thing for shirts and pants, American made is there to buy, but it costs much more. Stop complaining about all these lost jobs. Put you money were you mouth is, stop buying imports and buy American.
5
@David
"Put you money were you mouth is, stop buying imports and buy American. " sic.
Already do, thanks for the lecture though.
Hmmmm? Take a little less than 1 million bucks and start a factory in Cambodia (Including solar/conventional power plant, water supply, et.), not bad, Maybe I could sell my Calif. property and become a mini-despot! And I could still use China-built supply chains and get away with it unless POTUS Trump decides to spitefully nail little Cambodia to little spot on the wall for being non-Maga.
Chiner, despite its miserable human rights record and social/political folly (Chairman Mou and his little read books), has built itself into a manufacturing might ( in just a few decades), that should be literally feared or worked with, because U.S.’ non-presence in the South China Sea’s has made us a sort of a ghost , or non-actor, with it’s mistaken attempt to instill democracy there in SE Asia (Vietnam & contiguous countries, like.... Cambodia! the subject of this very article..... moaning sound). Do little circles never keep getting running ‘round?
3
Drastically altering supply chains is a nightmare. I know this from experience. However, we shouldn't paint a rosy picture over China's performance. Results vary wildly but I would err on the side of negative. China is sort of the best of a bad group. That's not much of a recommendation.
I would regularly experience 6-week product delays on shipments from China. This is fine for light weight objects like sunglasses. Heavy items like beach umbrellas need to go by boat. A six week delay on a seasonal items like beach umbrellas means you missed the season. Have fun storing the product for a year.
Things were often not to spec or faulty to the point of liability. The company made safety equipment among other things. I once spent an entire weekend re-drilling screws on bike helmets because someone in China used a batch of screws that didn't pass quality inspection.
I had to mold treat water resistant fabric because the manufacturer was shorting the design team on desiccant. We had to send engineers over every season to handle quality issues. Basic reporting was next to impossible. My entire experience with China was a nightmare.
The owners liked the profit margins though so to China we went. Did you know the profit margin on a pair of non-prescription Oakley sunglasses is somewhere around 70 percent? Depending on the options, the lenses cost about five dollars to make in China. Food for thought.
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@Andy In the early days of going overseas, I too had these headaches. But when ISO certification and GMP were instituted, I only worked with top tier manufacturers and saved my clients all sorts of quality issue headaches. Going to China was inevitable in my opinion. Cheap stuff manufacturing was going away with China or without. The focus for these tariffs should be our big ticket items and our technology items.
@Andy "The owners liked the profit margins..."
And behind that simple statement lies the failure of Multinational Capitalism. Cheaper costs are meant to be passed on to consumers through cheaper prices - they aren't. They have been used to increase profits for corporations and their executives.
(Oakley is a subsidiary of Luxottica which controls 25% of global eyewear sales.)
Less competition through growing market monopolization, marginalizing consumers and consumer choices, forever chasing the cheapest global labor source to be abused for the sake of corporate profits.
The entire article is blind to the most obvious of facts: Manufacturers want good infrastructure, talented labor pool, stable government, innovation? Try manufacturing in the USA. They decry "costs?" Simple: Pay execs less, pay less stock dividends, cut back on corporate excess leading to fatback billionaires galore.
Gee, you know, like it was back in the good ol' 1940's, 50's, 60's, 70's...before every business school in the US starting teaching that Greed was THE most important American Value to a CEO.
This is what Trump should be spending time trying to solve, along with the US health crisis, infrastructure, Iran, North Korea, immigration reform.....
But what is his priority? Protecting himself by forcing out Rosenstein to get to Mueller.
18
Worked in the Electronic industry for many years, chasing manuf. in low cost countries. It is an ugly game diving by tax avoidance and cost accounting games and holding companies. Notice how few companies plan to bring any jobs back to N. America. To do this correctly a electronic product must be designed for high volume production and limited touch by hand labor to hit the cost targets for a profitable product that is built in the USA. A product re-design will take a minimal of 8-12 months. This should be the approach the US Government drives toward. The current way will is the wac- o-mole approach, always drives ups the company cost, and product launch schedules and cost targets are not met. This gives company managers a way-out, can play costing trick to lessen the impacts to the balance sheet.
Vietnam has very limited infrastructure to support global manufacture been trying to build up for year with Caterpillar as a earlier adopter, and Thailand has a great work force, but in the past, a coup every few years have driven out everyone including most car companies and computer industry, but the Japanese companies remain.
Bring the work for more advance Electronic products back to the US but on a realistic time-line, the supply-chain will follow rather quickly. Move of electronics to Mexico in the 1990's is a perfect example. Still can hear the Taiwanese mangers incensed about why the Mexican Labor force will not work on Sundays or like overtime on Saturday...
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" As tariffs begin to make China look more expensive, many companies are considering cheaper places to make their products, like Vietnam, Cambodia, Bangladesh and Ethiopia."
What not Kansas, Michigan or Indiana? This is making America great again? This is just another trump failure.
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@Steve: I'm glad to know you know so many Americans willing to work for five dollars a day. Is this in Kansas, slowly reverting to the 19th Century? Where do I find people who can live in America on the price of a cup of coffee? They would be immensely valuable. Especially when armed.
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@Steve
The time will come when the USA is the low-wage country, and Chine will use it as their manufacturing base. Trump is trying to move this along. Visionary.
4
China will find a way around the tariffs. It has found a way around other sanctions by exporting by ship flying under another nations flag. It will work within the law to get around the tariffs.
There is a rising middle class in China and they subcontract out the work to smaller nations like Cambodia where the wages paid are even less than what China pays to its workers.
The USA government recently gave tax cuts to the rich, so are the tariffs there to make up the shortfall.
NZ has been trading with nations with tariffs for years, including the USA farming industry, and we manage to be competitive as USA is our third biggest trading partner, for exports.
NZ was one of the first nations to enter into a free trade agreement with China and we have done well from that and continue to do so as they are reliable trading partners, so tariffs or no tariffs, if your product is what people want then they'll buy it.
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Can you give us the data that the average Chinese worker earns US$10,000/year? The link takes us to an article stating that Chinese workers made, on average, $429/month. That comes out to $5148.
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Notice they're not considering moving the factories back to the US. So what does the administration hope to accomplish? Not bringing jobs back to the US----in making America great again. In the meantime, those people who put their trust in trump thinking he'd undo the last 20 or 30 years in America's economy will soon be paying astronomical prices everywhere from Walmart to their local car dealers.
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@Julia the economy is at an all time high
1
@Julia But they are, this newspaper just does not cover it much, and foreign companies are building here as well.
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USA doesn't seem to be very good at playing the Exchange Rate game to get more export orders. Work smarter - not harder. Maybe that's why your government debt to GDP is one of the highest in the world.
USA can buy products off NZ and pay less than what our exchange rate is worth because of our NZ dollar exchange rate. (In other words, USA would be getting more bang for their buck.) So, in reality our exported products, where USA charges tariffs, are very competitive with USA products.
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A good article, but I want every liberal globalist to pay close attention to a single paragraph in it.
"One American company recently told a supplier with a factory in Phnom Penh that it wants to take its China production down to zero as soon as possible in order to avoid tariffs... That Phnom Penh factory plans to hire 1,000 more workers in the next month and employ nearly 10,000 workers by next year."
Now imagine that our tariffs applied to every nation, and that company was creating manufacturing 10,000 jobs here, and you might be able to understand why globalists are losing ground everywhere.
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@Mike H. Imagine the cost of that product to anyone. Maybe those made richer by the Republican DEBT FUELED tax cuts would buy a few. More likely that product would not exist. On the other hand the fewer things available to buy the better for the environment. So here's to full on trade war as a major action to accomplish those Paris Climate Accord goals and more. The less consumption the better for the our long term survival.
8
That company is moving to Cambodia. And that's the point. None of these companies are even considering bringing manufacturing back to the U.S. People in Asia work for pennies on the dollar compared to the U.S., and no companies are willing to pay American workers a living wage when they can pay a fraction of that elsewhere. So this trade war will hurt China and the U.S., but those jobs aren't coming back. At least not here.
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"“It is the worst nightmare known to man,” Mr. Baum said. He recently finished an order for umbrellas for Costco. The wood handles from Italy were delayed. The polyester from Taiwan was the wrong pattern."
Wow, Mr. Baum. I sincerely doubt that your delayed wood handles can be classified among the worst nightmares that many of our fellow humans experience day-to-day. I would hazard a guess that some of those humans may also be your overworked and underpaid employees.
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@DrB Right on and lots of umbrella's for sell at thrift stores. Besides fueling the #metoo movement DJT and his trade wars will go down in history as the greatest action any country did for lower global temperature.
Slow to no economic growth means major consumption of already used stuff.
7
The article makes it sound as if these vaunted supply chains in China have been there forever. It's only been 25-30 years.
You know, the US once had complex, reliable supply chains for tech and still does for autos.
I don't think the US should merely swap a trade deficit with China for trade deficits with other countries. What's the point of that?
10
we exchange money for time
we spend money to save time
we spend time to save money
pay more to get quicker and better
or wait longer to get cheaper and hopefully OK
good, cheap, fast - choose any - two ...
7
@Frank Anything we can do to slow consumption. More expensive, difficult to get stuff is the answer to global warming. Just think what an improvement it would be if everyone had a "victory" garden covering those ridiculous manicured front and back yards. And instead of laying around watching TV or other screens infested with advertising we would be growing more of our own food. Food that need not be trucked across country. Global trade has been an ecological disaster.
30
This is the nuts and bolts of how a trade war plays out. China now gives its workers better wages. Tarif increases add to the desire of foreign companies to out of China. So businesses search for new sources of cheap labor. But China controls supply chains and has sophisticated infra structure in place. China is not going to quickly be hurt by the desire of the Trump administration to punish China.
6
I am confident that countries other than China are capable of producing cheap defective products.
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I wouldn’t go so far as saying cheap and defective : some of the transistors (i.e. a lowly 2N2222, rated to mil SPEC TXE reliability) that I would use in preparing a power supply for a to-be-built B1b bomber, were very costly items, just because of the extensive reliability testing to obtain a ‘TXE’ rating. The ironic thing is, they were manufactured in Chiner!
1
The one new option and it seems more real now than 3 months ago; Combined Korea's.
They can match the efficiency, cost and supply chain needed to deliver the items Walmart's, Menard's, Home Depot etc need.
Leader Kim is now focusing on the economy, his recent summit with Moon is also a sign of some deal on peace in the peninsula.
The reason, China will never want to broker a peace in the Korea's, is because they will pay an economic price, and lose jobs to the cheaper option, N Korea.
That should be a card US should play, they will benefit from the rift.
2
Well US factories are more convenient, and can be very reliable. Mexico is another possibility as we have a good new trade agreement with them. China is cheap, and not that good of quality sometimes.
2
@vulcanalex,
Where are all these reliable US factories? Do they produce the variety and volume of goods that Chinese factories do? And what new trade agreement with Mexico are you talking about?
1
That these companies think $10,000 a year for factory workers is too expensive is quite telling--and disturbing.
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@gigantor21 What is also telling is that it does not appear that men are doing much, if any, of the work, yet only men were interviewed for this article. Maybe the working-class men are conscripted into the military. In any case it appears the women are providing very cheap labor to keep China afloat.
8
Great writing by Alexandra Stevenson, and I am left with some questions for the companies that are vacating China.
Their moves can't be based solely on the acts of an unstable U.S. president. Even if trump stays in office, he could change his trade policy toward China tomorrow. Of course, were trump to be impeached, or to lose the 2020 election, and Republicans to be kicked out of office, the U.S. would return to a much more rational government. The effectiveness of trump's vindictive tariffs would have to be reevaluated, as for everything else that trump has done.
Those companies that leave China must be in very labor intensive industries, the cost of which is so critical that it dominates infrastructure and supply chain problems. Maybe they're moving because of an inflationary future for manufacturing in China, which is far more predictable than is trump's behavior. A company that critically depends on the cost of labor and stays in China might find itself behind a competitor who has moved elsewhere.
It all begs the question, what exactly is trump attempting to do with his tariffs other than pander to his poorly educated followers? From Alexandra's article here, it appears that companies will seek the cheapest labor, despite the difficulties with doing so. Workers in the heartland can't compete with Chinese labor; in no way will they compete with Cambodian labor.
15
People who sincerely believe that it’s unfair to compete with third world workers earning paltry wages should applaud the fact that China’s growing productivity is allowing it to compete while paying higher wages than before. Of course, the fact that protectionists are imposing tariffs on China but not lower-wage countries now just shows that the low-wage competition argument was always made in bad faith.
12
The Chinese are reliable. They deliver. However they do so by keeping in place a variety of unethical practices in the way they treat workers, some of which violate international laws concerning human rights.
It is these issues which should be discussed and focused upon by the U.S. in addition to concerns over copyright infringement and dumping of goods to thwart competition.
Yet despite all these legitimets grievances some of which would be noble to fight for, the Trump administration has taken the low road — behind everything they're doing in this trade war is nothing more complicated or ethical than getting one's hands on more money, and using threats and the weight of your position to force others to bend to your will.
International trade can be redirected for the good of American workers and the evolution of social change for the better — but it's not happening here.
This is a vulgar attempt at might makes right, a game of chicken —exploitation. It matters that China is the bad guy in real ways, but ignoring the details of that reality and applying a simple solution to a complex problem will end in failure, because it always does. Stupid doesn't work. Macho bravado is a sad excuse for professional business practices. The damage is going to be huge and long lasting — in the near future China will be unreliable and not deliver. Their trade will be focused on Australia, Canada, Europe, etc. The US will be alone and poorer for it. And the chinese worker as exploited as ever.
15
I see a lot of comments here that say that jobs are not moving back to the US. Perhaps true but disrupting and putting the Chinese economy in a recession is a worthy goal in itself. China is a strategic adversary. If we can torpedo their economy and facilitate Xi's ouster that would a good outcome of this trade war.
6
@Sam Good point but ouster is not happening over an economy.
1
@Sam I second your thoughts. Too many people on this comment board are quick to find fault with Trump or the take partisan positions without considering the alternatives. If jobs move from China to another country that is a willing partner to the US and not as a strategic competitor, that is in of itself an excellent objective.
3
@Sam And therefore if the Chinese, or anyone else, decide that if they can torpedo the US economy and facilitate Trump's ouster, they should go for it? That goose/gander thingy? Be careful what you wish for.
1
When Trump walks into one of his rallies, he's wearing a "Trump Collection" suit, manufactured in Mexico, a Trump shirt brought in from Indonesia, and his money clip and tie, manufacturing in one of his sweatshops in China. The labor pays pennies since it is piecemeal and the employees have to fill an arduous quota before they can get paid for the day or even leave the factory without getting arrested.
And during Trump's presidency, he just keeps adding more tradmarks from China expanding his business portfolio there.
In addition, how much business is he bringing to Russia - now that China is buying THEIR corn, soy, and pork products from there instead of here.
His bottom line is always, "What's in it for me" - and if compromised, it is also "What's in it for Russia."
America's - since Trump's presidency has been, "At what cost to us" -- not that his GOP court jesters in this Trump House and Trump Senate care. They aren't even that good at PRETENDING that they care.
VOTE.
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@Jbugko
You wrote: "The labor pays pennies since it is piecemeal and the employees have to fill an arduous quota before they can get paid for the day or even leave the factory without getting arrested."
You have great imagination or you just believe everything your media fed you? If that was true, why would these manufacturers even move?
Trump has isolated the USA and corporations serve global markets. Trump’s actions won’t affect corporations abroad, but will lead to American branch offices that are non-competitive and outdated, living contentedly behind tariff walls that make innovation unnecessary and the USA a backwater.
20
Shopping 'Always the low price' for decades has economic consequences we should be mindful of, as it has most often means 'not made here by anyone who pays taxes here.' As China becomes more expensive, we should be aware of where markets 'push' products & their production.
Always read labels, and think of who benefits.
11
For all of America's precious boycotts of Facebook, Starbucks or any number of politically incorrect "pariahs", we seem blind to China's inherent evil. We enable Apple, Google and other Chinese economic enablers and then compound it by also consuming the worst of the inferior cheap knock-offs which feed their oppressive machine.
They are (by affect) THE most repressive Oligarchy on the planet. That consumers are willing to enable this despicable Leviathan only to save a dollar or two for the privilege of serving inferior dog food or worse to their families' is the height of hypocrisy. China HAS chosen to be who they are. If consumers continue to enable these choices by choosing inferior (and knocked-off) Chinese products, then the definition of "Pariah" expands to include the enablers' too.
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@tillzen
Word.
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@tillzen "China's inherent evil"? Give me a break. The goal of every economic establishment anywhere in the world is to do what is best for their own country. That is not "evil." America has been shortchanging other countries on trade for countless years and none of the hypocrites calling China "evil" have said anything about it.
1
It appears from the photos that all of our country's slaves in China and Cambodia are female. The interviewees in the article are "Mr."s.
I don't think it's a bad idea to shift to producing goods in the US or other countries, even countries where females are allowed to live into adulthood for reasons other than the convenience of enslaving them so we can enjoy cheap stuff here in the US.
7
Bbbbbbbut I thought these companies were supposed to move back to the US? Fat chance. They’re looking for cheaper than China. Next up - trade wars with Cambodia and Vietnam.
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@Douglas Lowenthal
Very true, China will just shift production to other countries. There should be greater tax incentives for these U.S. companies to maintain and/or return more of their manufacturing jobs to the country.
That said, it looks to me like both the Republicans and Democratic parties care more about cheap consumer goods than the plight of American workers.
5
In war there is sacrifice for a future good. If ever there was a trade war where the sacrifice is worth the benefit this is it. It's high time the Chinese are punished for their unfair trade practices and theft of intellectual property. Thank you President Trump for having the courage to act on this.
4
@Robyes thanks for this wonderful new tax on consumers.
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@Rob And do remember the benefit trade wars have on global warming as consumption slows and more folks visit garage sales and thrift stores. No more carbon belching cargo container ships, at least not as many, and fewer heavy trucks belching carbon and smashing our highways. Sustainability, hopefully, will become the new normal. Sustainability was a major MAGA goal, correct?
4
@Blackcat66 There is not tax on garage sales in most towns. And shopping at thrift stores should become the new normal. America needs to take down its hyper consumption down to, oh....say...just excessive consumption? Maybe? Would that be progress. You know slow or no growth...instead of buying new furniture take all that old outdated furniture your mom would love for you to take instead of strangers.
The article should include reference to the need to "tip" government officials to get approvals and avoid regulatory penalties. This cost is typically disguised as part of "legal fees and expenses" to short-circuit US foreign corruption laws. The cost will be less predictable in less developed countries.
3
Canada, United States work force. Aging population. Massive baby boomer retirement. Canada going to unlimited weed intake in October. Prescription drugs everywhere in both countries. Youth taught to spend, spend, spend like their baby boomer parents. And now tariff wars brought back to 1930, which increase consumer costs and emotional stress for Canadian and American tax payers. And the big financial losers in tariff wars for Canada and the USA is the trucking industry as trade diminishes, as the USA wants. Consumers though, in Canada may benefit, with the American- China war, but caring for their retirees and narcotics can't help Canadian taxpayers.
4
What is clearest of all is the Don
Has no notion of stumbling upon
Something multilayered
And not to be dared
By an untutored pseudo Don Juan.
9
Trump & co have a math problem - well, what do you expect when they think Earth had only 6,000 year history - when they think the number 1.3B (Chinese) is smaller than 350M (Americans). And China has spent heavily on education and infrastructures, especially during the Great Recession which it understood a crisis is also an opportunuity while America languished because of the Great Obstruction Party. Eight years during the time of technological revolution and upheavals are a long time, at least a couple of business cycles. And Trump now tries a brute force to correct it. A double whammy!
25
"...The worsening trade war between the United States and China has intensified pressure on companies to leave China and set up factories in places like Cambodia, a verdant country of 16 million people with low wages and high hopes."
A delicious devils dilemma and ironic result for Republican free traders and their sponsor American companies which sell almost exclusively to Americans. Cambodia or home?? Cambodia or home?? Will Trump follow them to Cambodia in order to please the base. Cambodia or home????
9
I didn't see any examples of manufacturers moving to the US in large numbers, except maybe one company that included some assembly in Houston (along with 3 other places). So, how will this trade war and shifting of manufacturing to other cheap labor countries effect the US trade deficit? Minimally. The trade deficit arises from the fact that Americans are spenders and the rest of the world has mostly savers. The result? A large trade deficit. What we will likely experience soon is an increase in inflation, which, with a little bad luck, might slow down the economy. If the economy begins to slow and inflation is up, then a number of other dominoes might begin to fall. All in the pursuit of an imaginary shift in the trade deficit. A better idea would have been to focus on bad trade practices by China, such as the requirement to reveal trade secrets to gain market entry, and to do this in concert with the rest of the world. Instead, we started trade spats with out allies at the same time. Very poor planning.
33
The race is on to get out of China. With tariffs going up to 25% shipments will have to stop by the end of November.
The infrastructure, workers, ports don't exist to move all of this business at the drop of a hat. Cash will be squeezed and workers will be laid of and loss all of their benefits. Bankruptcies will be increasing.
What won't change is the largest electronics and car market will still be China.
26