This is China Paying for It

Notwithstanding the claims of the free market mousketeers, China has always had more to lose in the event of a trade war.

Now, we are seeing the Chinese consequences of a trade war, where US firms are moving their supply chains from China.

It is neither trivial nor cheap to move a supply change, and once moved, it is neither trivial nor cheap to move a supply chain back, so any changes resulting from Trump’s tariffs are likely to be long term:

U.S. manufacturers are shifting production to countries outside of China as trade tensions between the world’s two biggest economies stretch into a second year.

Companies that make Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras are producing goods in other countries to avoid U.S. tariffs of as much as 25% on some $250 billion of imports from China. Apple Inc. also is considering shifting final assembly of some of its devices out of China to avoid U.S. tariffs.

Furniture-maker Lovesac Co. is making about 60% of its furniture in China, down from 75% at the start of the year. “We have been shifting production to Vietnam very aggressively,” said Shawn Nelson, chief executive of the Stamford, Conn., company. Mr. Nelson said he plans to have no production in China by the end of next year.

………

“Once you move, you don’t go back,” Mr. Nelson said.

This is something that people miss:  China is far more dependent on existing supply chains than the US does.

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