“Your “lots of other low cost producers...” comment reflects a very naive opinion of the reality of managing supply chain.”
You are being naive.
There are advantages to having the whole suite of capabilities, but that is not a permanent condition. That supply chain was shifted from the USA to China. It can, and will change again. It already is.
Hundreds of major companies are now in the process of moving their production out of China, and the supporting supply chain and infrastructure is developing at those new locations, as it is beginning to wither in China.
Labor costs and real estate in China have risen markedly over the last two decades. The cost of intellectual property theft has skyrocketed in China - it is virtually certain to occur there. Foreign Direct Investment in Chinese manufacturing began drying up years before President Trump’s election because of these and other factors.
Do you think that the rest of the world is uniformly incapable or unconcerned about developing their own economies, with integrated supply chain efficiencies? Quite the contrary - competition is fierce. If anything, the path to doing so is clearer now than when China set out to develop theirs. Not only are competing countries aggressively pursuing this, but manufacturing giants eager to leave China have been assisting them - sometimes able to write their own laws and regulations for the accommodating new Countries to use. US led International Development Agencies, like the World Bank, can drop in a set of best practices, and have been financing the needed infrastructure developments. It is the development opportunity of a generation, and a rush is on to get the biggest possible slice.
India, Thailand, Indonesia and Vietnam are well down the road to take large chunks of sophisticated manufacturing business from China. Korea and Japan are pulling a significant amount of their Chinese production back home with big investments in robots. Mainland Chinese producers themselves have been increasingly off-shoring their own low cost production to Myanmar, Ethiopia, Bangladesh and elsewhere for several years.
The trade deals that the Trump Administration renegotiated with all of our major trading partners outside of China - Mexico, Canada, the EU, Japan and Korea; went so quickly precisely because we were dividing up China’s piece of the pie among us. There is a global consensus among developed economies to shift the supply chain out of China, because of their lawless lying, cheating and stealing; as well as the frightening aggressiveness they have exhibited on so many fronts. China has collected many enemies with its behavior, whereas its allies consist mainly of North Korea.
“Lots of other low cost producers” are already shipping competitive products, at competitive prices. US consumers have seen very low price inflation, relative to historical norms so far in this process (the first $30 billion/year of new tariffs). The President himself tweeted yesterday (5 May), “The Tariffs paid to the USA have had little impact on product cost”. The shift out of China will speed up now with these larger tariffs, but broad preparations have been underway for years. It has been very well planned and managed by this Administration.
We will just have to see how much the new tariffs result in new costs to American consumers. The worst case - a dollar for dollar transfer of the tariff cost directly to the consumer - would be $30 billion dollars a year over a $20 trillion dollar economy. That would be equivalent to the price of gas going up 20 cents a gallon. So far though, the rise in prices to American consumers has been only pennies on the dollar of new tariffs - lost in the noise of of other factors.
The replacement of suppliers has been proceeding smoothly and efficiently. It has been basically transparent to Western consumers.
When you call people “consumers” you reduce them to unthinking insect status. Globalists like you should be be ashamed of yourselves. You all should be hunted down and exiled to the third world.
“The worst case - a dollar for dollar transfer of the tariff cost directly to the consumer - would be $30 billion dollars a year over a $20 trillion dollar economy. “
Tariffs of 25% will now be included in the landed cost of product, and as I mentioned above, become the base layer where margins are calculated. Stroll through WalMart or any other store for that matter, and look at Made in China stickers. This action will result in much higher prices being paid by the consumer, there will be no pass—through, there will be little sharing between the importer and Chinese supplier.
One thing you did say that I agree with is “major companies are now in the process of moving their production of of China”, true. However, what about the small and mid-size companies that rely on China to supply them their goods? Do you think THEY have the resources to establish presence outside of China?
If it doesn’t end quickly, this will result in consumer prices going up aka inflation.