Your program is impractical. Where are electronics manufacturers supposed to purchase resistors? Or capacitors? They’re all made in China now. Until an American manufacturer, like Kemet, who used to manufacture capacitors in the United States, begins doing so again, we have very little raw materials for electronics made here in the United States.
“Where are electronics manufacturers supposed to purchase resistors? Or capacitors? They’re all made in China now.”
Not the first time that this question has been asked. Planning has been underway for years.
President Trump began rotating business leaders through the White House his first week in office, telling them that tariffs were coming, and that supply chains would need to get of China - for National security reasons, and for their own financial security as well. There had to be a de-coupling of our economies.
So preparatory lead times started then. Of course, many did not take on the effort and expense in earnest, until the tariffs really started dropping, but they were looking at options.
One thing after another, after another, has kept driving the business community to take greater urgency to prepare alternatives to China for supply. COVID might be the biggest of them all.
The tariffs are determinative however. 25% basically does it, but both the President and Commerce Secretary Ross have said that the number will be dialed up as needed. They have already done that for targeted products (those China was currently targeting in their rolling takeover) - 200% and 300% tariffs in some cases. That settles the sourcing question with China.
The tariffs were strategically rolled out like clockwork, one category of products after another, generally in increments (10% initially, up to 25% in the next quarter or half).
Half of Chinese exports to the USA have already received their 25% tariffs, and those are moving out from China. A lot of analysis went into what could, should, or had to come out; before other things could should or had to come out.
The other half of Chinese exports (not yet subject to big tariffs), includes the bulk of their electronics industry in Shenzhen and the Greater Pearl River Delta megalopolis. That is the last great category - the crown jewel (there’s also some “Walmart”-type finished consumer goods). The administration has been holding fire on this package of tariffs (which are all prepared, to drop on order), to give companies a feasible opportunity to relocate - that is, to minimize the cost and pain to American companies and consumers. It just took longer with these complex products, and that industry was dear to the communist leadership (who prize having a pervasive Global spy network), so it’s threat retained some effective policy leverage over the communists.
Apple’s main supplier, Foxconn, has been ramping up their capacity at their facilities in other countries, like Vietnam, India and Indonesia to take the load. One approach, is that almost all new production lines for new models, have been established outside of China for the last few years (except for the product expected to be sold in China).
The Japanese pulled out of the biggest single production facility in Shenzhen (for screens), only weeks before it was to start work, before the COVID crisis. Since COVID, Japan has announced a big subsidy package, to pay its firms relocation expenses, to move out of China. The Korean Chaebol have been pulling out from China Wholesale. India is in the midst of taking major action, as is the Anglosphere (Five Eyes partners) The UK, Canada, Australia and New Zealand.
The major trade deal re-negotiations to replace NAFTA (USMCA), and with the EU, Japan and Korea; all went very rapidly by historical standards, in part because a common theme was to take business from China, and split it between the parties.
A lot of the production from China will go to other low cost producers (who have been scrambling to build capacity and infrastructure to handle it), rather than come to the USA itself. Most of it will come from diverse sources, because no other country is big enough for it all (India is a big winner, but unable to absorb that much yet).
I don’t know who will be making the commodity resistors and capacitors and such, but the World-class best people in the field for sourcing those items (like Foxconn) have been working it hard for the last few years. They should be able to work something out, especially with so many Governments willingly stepping up to subsidize the relocation of products identified as essential (like we did with rare earth metals, and are now starting to do for pharmaceuticals).
I just don’t see how the Global financiers, the companies who specialize in the field, and all the interested Governments would miss those fundamental components of the electronics supply chain, when the electronics industry is probably the crown jewel of what is up for grabs, in the Great Decoupling from communist China.