Trump’s Trade War With China Is Changing the World

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Trump’s Trade War With China Is Changing the World


That means we could be at a history-altering moment. Since the 1990s, policymakers and business titans have assumed that the globe will become more and more integrated. Perhaps the greatest symbol of that process was the relationship between the U.S. and China. Here were two powers with polar-opposite political systems and ideologies that were still becoming intertwined through bonds of trade, money and individuals—so much so that a term was coined to describe it: Chimerica. China became the central hub of planet-spanning links of production and exchange. Sure, people had the occasional gripes about human rights, closed markets, and other issues. But with the fall of the Soviet Union and the end of the Cold War, the creation of one world seemed the inevitable future.

Not anymore. With that partnership between the U.S. and China anything but assured, businesses are redrawing the map of global production. Apple is reportedly exploring shifting final assembly of as much as a third of some devices out of China to Southeast Asia or elsewhere. (Apple did not respond to a request for comment.) Terry Gou, the founder of Taiwan’s Foxconn, which makes Apple gear in Chinese factories, recently said he would urge Apple to produce outside of China.

Other lesser-known companies such as Giant Manufacturing, the world’s largest bicycle maker, have already shifted production for U.S. customers. Giant has moved the manufacture of many U.S.-bound models to its home base in Taiwan, and is opening a new factory in Hungary. “The world is no longer flat,” Giant’s chairwoman, Bonnie Tu, told Bloomberg.

These are far from isolated cases: A survey released in May by two branches of the American Chamber of Commerce in China revealed that about 40 percent of respondents said they have relocated or are considering moving manufacturing operations out of China.

This process has been underway for some time, due to rising costs in China and other factory. American toymaker Hasbro says it has been steadily reducing the share of products sold in the U.S. that are made in China, from 80 percent in 2012 to 67 percent at the end of 2018, and plans to shrink that further in coming years. But the trade war has compelled chief executives to step on the gas. “What companies are doing is accelerating their plans to move out of China,” Stephen Lamar, executive vice president of the American Apparel & Footwear Association, told me. He calls it a “generational shift” in how U.S. companies are sourcing their products.

For some countries, that comes as good news. Businesses looking to shift assembly lines from China tend to target other emerging economies as a new base. Modern economic history tells us that the jobs created by such factories in poor countries can jumpstart economic growth and alleviate poverty (as happened in China itself). Already places such as Vietnam have benefited by siphoning factories away from China.



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