Posted on 09/03/2019 9:24:11 AM PDT by SeekAndFind
President Trump and other mercantilists are hoping that his tariffs will drive U.S companies out of China, perhaps even back to the United States. They can keep hoping. It’s not likely to happen.
In a further escalation of his trade war, on August 23 Trump “ordered” U.S companies to leave China, or even return to the United States. This prompted a debate among legal scholars as to whether he even has the authority to do that. Regardless of whether he does or doesn’t, it is unlikely to have any impact.
A proviso is called for here. Some U.S companies are already leaving China - and started to before Trump became president. For one thing, wages in China have been climbing. Since 2008, the average wage in China has tripled. But rather than return to Ohio or Pennsylvania, companies are departing for Vietnam, India, Indonesia and Bangladesh, simply accelerating a move that was underway long before Trump launched his trade war.
Will the corporate exodus pick up? Likely not much. For one thing, companies would have to worry about whether the country they choose to go to would be the next target of protectionist wrath. That’s one of the problems with pursuing a protectionist trade policy - one never knows what country will get a target painted on its back next. Unable to decipher any hint of a long-term plan, U.S companies simply have to function on a day-by-day basis.
India is a good example of a future target. Trump has already removed zero-duty access on $6.3 billion of Indian goods. The Indian government has threatened tariff retaliation.
Vietnam is the most frequent country of choice for U.S companies departing China. Vietnam was already becoming the second Asian home of production for U.S manufactures long ago. Nike moved there in the 1990s, and Cannon copiers in 2012. But while the country is seen as a great place for textile firms, toy makers and footwear manufacturers, and even furniture makers, like most Asian countries it has neither the infrastructure nor the skilled workforce most companies need. Vietnam doesn’t even have the population. It is about a tenth the size of China. If a large number of U.S companies were to move their operations there, the country’s ability to serve as a supplier would be maxed out in a year.
In response to the import taxes on China, some countries have developed supply sources in other Asian countries - with the cooperation of the Beijing government and Chinese companies. Much of the raw materials are still sourced in China; Asian production capacity is simply widened.
While we will no doubt see some companies leave China, few will return to the United States. For one thing, there are simply not enough workers available in a mature economy with a low unemployment rate and a growing proportion of seniors. Domestic labor sources do not exist on the scale that would be needed - one of the reasons the Taiwanese firm Foxconn revamped its investment plans in Wisconsin. U.S consumers would have to build a whole new infrastructure - factories, domestic supplier chains, worker training - a task that would likely take decades. As it stands now, with hour a massive return of production facilities, The United States will soon need a half-million more skilled workers. Deloitte estimates it the country will require a couple of million by 2030.
For another thing, the United States no longer constitutes as big a market as it used to. By 2030, it will be accountable for only 7 percent of sales - less than a third as much as China.
Given comparative growth numbers like this, it is not surprising to see corporate executives salivate at the idea of increasing their Chinese footprint. Trump railed against GM for shifting some production to China - a week after China announced projected 25 tariffs on U.S-made automobiles. GM’s operations in China are actually aimed at the growing China market, where they can expect to sell more cars than in the United States. Last year, the company sold 3.6 million vehicles in China - compared to only 3 million in the United States. Despite the fact that it already faces punitive tariffs against its products from China, even Apple shifted production of the Mac Pro entirely to Shanghai. The United States simply doesn’t have the clout it once did.
The biggest problem the United States faces trying to repatriate companies is the fact that American wages are just too high. The average wage for Americans is about $60,000 per year, many times more than China, India or Vietnam.
If Washington tried to somehow force companies to repatriate their operations, domestic firms won’t be doing much hiring, at least not of American blue-collar workers. They will take a look at the cost of robotics, and realize that it’s a lot more efficient to shift to robots than pay increasingly scarce blue-collar workers $50 an hour. There would be more production in the United States - but no more jobs. That would be a boost for Silicon Valley firms that provide much of the AI software, but would just intensify the wage gap.
Of course, robots are not yet able to meet the needs of some companies, such as footwear makers, which require detailed, intricate work. If they are forced to compete from the Unites States, many of these companies will simply go out of business. Would Nike be able to compete with a European or Asian firm if it was yoked to U.S wage rates? More likely, they would look at Asian growth rates, and move more operations there. Again, the only result would be fewer jobs in the United States, and more in Asia.
Anyone hoping that blue-collar jobs will magically return to the United States can stop hoping for any such thing. Those jobs are gone. There is no point in crying over spilled milk.
I think a lot of manufacturing will return to the us to save shipping costs and add goodwill, but it will be done mostly by robots, so it won’t really be much of a jobs issue.
“No Matter What Trump Does, Those Jobs Aren’t Coming Back from China”
...but if they do, Obama gets the credit for it.
Some will come back. Some will not. But, every job moved out of China makes it more difficult and expensive for China to pursue its aggressive posture against the United States.
Also, it is worth trying. MAGA!
Considering that China has been adopting a belligerent and hostile posture, ANYTHING which reduces their power to wage war against us, is a good thing.
This would also include terminating all student and H1B visas for Chinese.
Some of those jobs will come back, especially if younger generations get some real education into how economies flourish. Even those that don’t come back, if they went to Central American and Caribbean countries, it would be beneficial for stabilizing their economies. That would cut down the forces driving the invasion crisis.
The average wage for Americans is about $60,000 per year, many times more than China, India or Vietnam..
But these POS know that 60k isn’t the average wage for factory workers.
15 an hour is 30k a year or less.
They are also wrong about robotics not leading to more jobs.
What a piss poor article full of holes that even I CAN shoot into a million pieces.
They don’t deserve a space on this great board.
But it is good to know the lies that are being spouted.
Then again, some here just post articles like these because they have a hard on for Trump (in a bad way) but are too ####ing cowardly to come out and say it.
And that’s how we get sh.t articles like these :)
There are two issues here:
1) Is automation going to be a problem for the US? Will there be too few jobs for Americans as industry becomes increasingly modernized? I would say “yes”.
2) Should China be allowed to take advantage of us though unfair trade practices, intellectual property theft, and currency manipulation? I would say “no”.
The two issues have no serious overlap. A mathematician would say that are “orthogonal”.
Maybe not, but it stops China from stealing our intellectual property and getting US dollars for products then using that money to undermine the USA. It also knocks them down as a financial competitor.
I find that articles like this one help stimulate the mind. We read through the article and assess the validity of the claims. That takes intelligence. That builds intelligence.
Everything serves a purpose, don’t you think ?
These jobs may not return to the US, but if they get transferred to another country, that is STILL a plus.
India or Thailand or Vietnam, still stems the flow of US dollars to fund the Chinese anti-US programs (primarily through North Korea), which is where a lot of the US cash is going, in subtle and sometimes not so subtle ways.
This game is being played on several different levels, one of which is by indirect support of various thorns like Hong Kong, firmly stabbing the Chinese under their tail.
China is and should be treated as an adversary. But an adversary with whom a deal is possible.
Just a little more on our terms this time.
As it stands now your car is 90% built by robots. That iconic image of mobs of guys with wrenches standing along Henry Ford’s assembly line just isn’t reality anymore.
Translation:
They aren't working in rice patties, eating the same thing every meal, and never leaving the region of the country their parents were born in.
-PJ
I heard that Black and Decker is building a factory in Texas to at least make Craftsman tools. Craftsman tools have been made in China and are Crap!
Shipping costs...it's the shipping costs from China.
I hope companies understand that the USA is leaving the Postal Union on 10/17/2019
Following the Trump letter to the Postal Union on 10/17/2018 giving a 1 year notice
That means that China will no longer have "developing nation" status for low cost postage to USA.
We really don’t need any more defeatists telling us what is possible and what isn’t. As I recall, most, if not all of what passes as the DC intelligentsia was pushing for Reagan to be diplomatic with the USSR, because the Soviets were there to stay and it was essential that we just find a way to get along. We all know how that turned out.
We should have 5, 10, 20, and 40 year plans on how to deal with China, and this should include ensuring US access to all precious metals we need, and a great strengthening of American production capacity.
I don't think so.
Someone has to build the robots and program the software. Based on the performance and durability of modern day electronics, the robots will have to be upgraded/replaced once a year. The software will undergo neverending revisions. Takes people to do that.
How much does the writer make per year?
If we pay our workers more, and prices go up, that's OK with me.
I'd rather pay more for goods and services that I want or need, if the quality products are made by USA workers.
Quality is the key, I will not pay more for inferior goods because of where they are made. Period.
Yeah but I know at this point who is posting it because they’re too cowardly to just come out and say they are against what Trump is doing.
sure it’s good to assess articles that bring up valid points posted by someone we know is at least open minded to what Trump is doing.
This example has neither valid points nor a FR thread poster that though over and over posts articles like this doesn’t have the balls to say straight out what he thinks.
Where I come from, that’s a called a p@ssy.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.