The Trump administration’s trade policy aims to bring manufacturing jobs back to the US, but experts at Bank of America (BofA) disagree. According to a recent survey of 1,000 global companies, reshoring, or moving production stateside, has peaked and will continue to slow.
The BofA team found that companies are shifting their production from China to emerging markets like Vietnam, Mexico, India, and Thailand due to lower costs and access to skilled labor. This trend is known as “friend-shoring.”
While incentives in the tax bill may encourage some manufacturing to return, only 20% of BofA analysts expect significant reshoring. Most experts believe that companies will move production to these emerging markets instead.
The study also found that manufacturing accounts for only 8% of US jobs, down from 20% in the 1980s. Even with high tariffs, companies are unlikely to make significant moves back to the US due to factors such as access to other markets and tariffs.
Countries like Vietnam, Mexico, India, and Thailand are expected to benefit from this trend, with Mexico being the most likely beneficiary due to its trade pact with the US. The BofA team predicts that tariffs will lead to price increases across regions, but to different degrees.
Source: https://www.barrons.com/articles/trump-tariffs-reshoring-too-late-8e673ddf