The recent imposition of tariffs by the US on dozens of countries, including major trading partners, threatens the strategy of companies shifting production from China to other nations as a response to rising labor costs and trade tensions. The tariff shift could restructure global supply chains, with corporations potentially swapping supply chain locations in their playbook.
Companies such as BMW and Toyota are expected to see reduced sales due to higher prices resulting from tariffs on imported cars. Higher tariffs worldwide may make US-made autos less affordable abroad.
The US-China trade war has led China’s companies to focus on the rest of the world, pulling back from trade with the US. This shift resulted in a record trillion-dollar global trade surplus for Chinese businesses.
However, emerging and advanced industrial economies are pushing back against this strategy by imposing tariffs on imported electric vehicles (EVs). The US has let China off the hook for exporting its overcapacity, but companies may now refocus their supply chains on the US.
The US-Mexico-Canada Agreement (USMCA) is a rare exception to US tariffs, saving certain goods and maintaining a temporary reprieve for trade between the three countries. However, the agreement’s future is uncertain, with President Trump signaling willingness to walk away from it. If USMCA winds down, companies may move to other markets, potentially leaving the US even further isolated in global supply chains.
The surge in manufactured goods has led to pushback from nations parallel coordinating their responses to China’s “China plus one” strategy. The only bright spot is the survival of USMCA, but its long-term implications remain unclear.
Source: https://economictimes.indiatimes.com/news/international/global-trends/us-plus-one-trump-creates-a-1-world-where-us-exporters-wont-thrive/articleshow/120125606.cms?from=mdr