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US exporters won’t thrive in a ‘plus-one’ world
Trump’s tariffs will shift manufacturers from a “China plus one” to a “US plus one” strategy, putting higher-cost US-made goods at a global competitive disadvantage.
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Tariffs raise the price of exports through higher production costs and tariffed components from abroad.
PHOTO: REUTERS
Shannon O'Neil
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US President Donald Trump’s tariffs look to bring investment and production back to the US. Some manufacturers will do so, as they vie to sell to America’s voracious consumers. But high tariff walls will delink US suppliers from the rest of the world, incentivising companies to move from a “China plus one” manufacturing model to “US plus one”. The end result will be the marginalising of US exports in the global economy.
China’s economy took off during the first decade of the 21st century through commercial integration with Asia and its evolution into the go-to source for consumers worldwide. A combination of membership in the World Trade Organisation, cheap labour, tax breaks for international businesses and the attraction of its billion-plus consumer market catapulted it to become the biggest global goods producer and second-largest economy.
