I worked at the corporate HQ of Wally for 5 years back in the early 2000s. Even then I asked “what happens if even one missile flies over the Taiwan strait?” The obvious answer was that store shelves would soon be empty.....the obvious conclusion was that Wally’s supply chain was way too dependent on China. For those wanting to hate on Wal-Mart, Target and the dollar stores sourced an even higher percentage of their goods from China.
If the big discount retailers have not used the last two years of warnings from President Trump to greatly diversify their sourcing, they will have only themselves to blame as tariffs get ratcheted up ever higher and get slapped on ever more goods. We absolutely can not afford to back down. We must force the Chicoms to end their mercantilist trade policies and industrial scale theft of intellectual property conducted by the PLA.
A few notes:
- most textiles are not from China. Bangladesh and India are much bigger textile producers and growing while China’s share of the textile market is shrinking.
- it is not just that the retailers are buying directly from China. It is also that a lot of the large consumer products companies they deal with on a massive scale (think P&G, think Unilever, etc) have also outsourced a lot of production to China.
- making large adjustments to global sourcing is like turning around an oil tanker. It takes time if you are not to have massive disruption and to not have customers feel the pain in terms of much higher prices and shortages. Trump could not simply snap his fingers on day one and impose a massive honking tariff on everything from China without hurting Americans a lot too. He has been warning and threatening for 2 years. He is gradually applying more tariffs and to more goods - giving retailers time to adjust. That is the only practical way this could be done. Be patient, we’re finally moving in the right direction.