China’s economy is suffering from the tariffs imposed by President
Trump. That is why China’s President Xi Jinping agreed to a tariff truce last night.
He knows that he has already lost the war.
In its last quarterly earnings report (September 20, 2018), Micron
Technologies noted that the China trade tariffs would impact its upcoming fiscal year
earnings a bit. Micron also reported that they were making changes to its supply
chain to minimize the tariffs’ impact. It was noted that those changes would
take two or three quarters to complete. Last week, only two months after Micron’s
earnings report and supply chain statement, the CEO of Micron made a statement that
his company has already completed most of the supply chain changes needed to
mitigate the impact of the China trade tariffs.
American businesses have very complex supply chains with
operations around the globe. It may take a few months, but most American
businesses are going to minimize their footprint in China. China is now too risky.
Businesses do not like risk. Furthermore, there are many more options available to American businesses today than there were when China was the place to go for manufacturing facilities with state-sponsored, sweetheart financing deals. India, Vietnam, Singapore and Malaysia are a few example of China alternatives. But, made in America is the best alternative.
There may be a temporary truce on tariffs, but China already shot
itself in the foot. American businesses will continue to minimize their
exposure to trade wars. Thus, in three months, China will be more disadvantaged than they are right now in negotiating trade terms.
This is a win for America and a win for the world. China has been
practicing predatory trade policies and a line has now been drawn in the sand.
Expect that line to be pushed back even further. Expect an increase in fair trade between good-willed member states of the world community.
No comments:
Post a Comment