Policies Shifted Trade from China?
Has trade for materials, components, and product shifted away from China to be used in the U.S.? Maybe, maybe not, and maybe later. If you are going to manufacture in the US, you have to have the capability. It make take a bit to get up and ready.
If we are buying product, etc. from Vietnam and Mexico, I would be planning a trip to each plant to see what the capabilities are. This is standard sourcing procedure. What is the capacity, conditions of the facility, quality, manpower, sources of materials, environment, documentation, etc. The same would hold true in the U.S.
It is easy enough to find out. Look at the Bill of Lading, SDS, CO, etc. Point of manufacture has to be identified also. A Certificate of Origin (CO) must have :
- Goods are grown, produced or manufactured in a country entitled to the specific tariff treatment
- Not less than a certain percentage of the production cost was incurred in the country of origin or a country entitled to the same or a more favorable tariff treatment
- The goods are shipped directly (or by acceptable transhipment) from one qualifying country to the other.
If they are not sure, than go to the plant and see for yourself what is occurring.
Also well-known standards like ISO or ANSI or a more niche accreditation like QS 9000 or IRIS, quality certifications should be in hand.
This is a silly article. I have yet to see the detail of the study to see if they discuss what the supplier have to prove they can supply what the US needs to safely manufacture or provide.
Trump, Biden Policies Shifted Trade from China, Study Shows, voanews.com
U.S. trade has shifted away from China due to policies enacted by the Biden and Trump administrations, but U.S. reliance on China-linked supply chains has not necessarily been reduced and consumers have faced higher costs, according to new research presented Saturday at a Federal Reserve economic symposium.
Despite deglobalization fears after the coronavirus pandemic and Russia’s invasion of Ukraine, overall trade “has held steady at just under 60% of world (gross domestic product) rather than gone into freefall,” Laura Alfaro, an economist at Harvard Business School, and Davin Chor, an associate professor at the Tuck School of Business at Dartmouth, concluded in their paper, which was presented at the annual gathering of central bankers and economists in Jackson Hole, Wyoming.
But U.S. tariffs on Chinese goods, recently enacted industrial policies, and the pandemic, do seem to have touched off a “‘great reallocation’ in supply chain activity: Direct US sourcing from China has decreased,” from 21.6% of U.S. imports as of 2016 to 16.5% last year, Alfaro and Chor wrote.
What’s less certain is what that means, with the authors saying the shift from China is raising prices for consumers without clearly providing offsetting benefits in the form of, for example, improved manufacturing efficiency in the U.S.
It is not even certain that the decline in China’s U.S. import share represents a true delinking, they said.
Vietnam and Mexico, for example, appear to have captured much of the reallocated trade, the authors said, based on an analysis of goods import and export patterns, while an increase in U.S. purchases of less processed goods from abroad was “indicative of some reshoring of production stages.”
And among companies, they said, “concerns are being voiced over the wisdom of sprawling supply chains that can expose firms and countries to the risk of disruptions,” from events like the pandemic or severe weather, or policy shocks like tariffs.
Yet in the background, the researchers noted that China had “stepped up” its trade and investment activity with Vietnam and Mexico, as well as other countries.
“The U.S. could well remain indirectly connected to China through its trade and global value chain links with these third-party countries,” they argued.
Prices for goods from some countries, moreover, were beginning to rise.
“The recent policy restrictions to shift sourcing patterns or even to encourage substitution toward domestic inputs are poised to add to wage and cost pressures in the U.S.,” the research found, a pointed conclusion as the Fed tries to lower inflation by slowing the U.S. economy.
“This is a silly article. I have yet to see the detail of the study to see if they discuss what the suppliers have to prove they can supply that the US needs to safely manufacture or provide….”
“Voice of America” is a government network that I would never think of reading for news or news analysis. The point here and now is to support Biden Administration policy and smash China.
ltr:
All the other articles are of the same measure. My impression is the original authors did not look that deep into what was going on with the shipments. What I cited is true as the receiver must have proof of all of the factors I have pointed out in this post.
My impression is the original authors did not look that deep into what was going on with the shipments. What I cited is true as the receiver must have proof of all of the factors I have pointed out in this post.
[ You are completely right, as usual. Your post is clear and excellent.
The paper from the 2 academics is not yet available. I will post a link for you whenever the paper is released. ]
ltr:
So, this is speculation and news centers trying to print before they read. Everything I said is true if one wishes to be ISO or QS qualified. If it is drugs, it is FDA and USDA certs.
This angers me, as it is just someone trying to sell false news.
My impression is the original authors did not look that deep into what was going on with the shipments. What I cited is true as the receiver must have proof of all of the factors I have pointed out in this post.
[ Again, as far as we can tell, you are completely correct. ]
ltr:
I don’t know. However even Bloomberg had the same dumb commentary. There is more to this than just throwing parts in a box. The shipper has to be qualified. The buyer has to have their information.
https://www.reuters.com/article/usa-fed-jackson-hole-globalization-idCAKBN30106K
August 26, 2023
Trump, Biden policies shifted trade from China at a cost, study shows
By Howard Schneider – Reuters
JACKSON HOLE, Wyoming – U.S. trade has shifted away from China due to policies enacted by the Biden and Trump administrations, but U.S. reliance on China-linked supply chains has not necessarily been reduced and consumers have faced higher costs, according to new research presented on Saturday at a Federal Reserve economic symposium.
Despite deglobalization fears after the coronavirus pandemic and Russia’s invasion of Ukraine, overall trade “has held steady at just under 60% of world (gross domestic product)rather than gone into freefall,” Laura Alfaro, an economist at Harvard Business School, and Davin Chor, an associate professor at the Tuck School of Business at Dartmouth, concluded in their paper, which was presented at the annual gathering of central bankers and economists in Jackson Hole, Wyoming.
But U.S. tariffs on Chinese goods, recently enacted industrial policies, and the pandemic, do seem to have touched off a “‘great reallocation’ in supply chain activity: Direct US sourcing from China has decreased,” from 21.6% of U.S. imports as of 2016 to 16.5% last year, Alfaro and Chor wrote.
What’s less certain is what that means, with the authors saying the shift from China is raising prices for consumers without clearly providing offsetting benefits in the form of, for example, improved manufacturing efficiency in the U.S.
It is not even certain that the decline in China’s U.S. import share represents a true delinking, they said….
“This is a silly article.”
That may be the case. ‘Voice of America’ is a US propaganda outlet, isn’t it?
What would you expect.
The top two economies in the world are huge rivals, and yet co-dependent. Go figure.
China would like the US to just stay out of Asian affairs. Reminiscent of the Monroe Doctrine.
Best we can do so far is to no longer recognize any ‘official’ status for the so-called ‘Republic of China’ (aka Taiwan), while still defending them to the hilt. And we are also allied with many other Asian nations, no doubt to China’s displeasure.
What a pickle!
Fred:
Did you read the first few paragraphs? What was my point?
I have no idea.
I picked up on this.
By ‘silly article’ I assumed you were referring to the V.O.A. piece.
The VOA piece can be found on Bloomberg too. It is a silly piece.
Stop Worrying About Chinese Hegemony in Asia
Foreign Policy – May 31, 2023
I would like to think that the US should just leave China alone, but that’s the isolationist in me. Probably the Dems in Washington (who were once accused by the GOP as ‘losing China’ to the Commies, to their everlasting shame) feel they can’t do that.
But the Foreign Policy piece above, as interesting as it is, does not mention Australia & NZ, our bulwarks in the Pacific. The US is indeed closely tied to Japan, South Korea & even Taiwan, by choice. So, we can’t simply allow to have its way without challenging them.
Which after all, is a rather screwy extension of the Monroe Doctrine to the far, far west of us. Call it ‘Manifest Destiny’ I believe.
And just keep on going, westward…
As I recall from high school history (I had rather good teachers of world – i.e. European – and American history), what was called ‘Manifest Destiny’ in America was an outgrowth of something similar in Europe.
Modern (post-Roman) European civilization moved generally eastward from central to western Europe, in various stages that lead to various peoples supplanting previous ones by force. Then, eventually they crossed the Atlantic to the New World and just kept on going.
In America this was decided to be the natural order of things, it seems. It isn’t, really.
Err: Modern (post-Roman) European civilization moved generally westward from central to western Europe …
I must mention that the Foreign Policy piece above, which seems to advocate just letting events procede as they must, that the ‘industrial powers around China (who could make nukes if they want to) will handle things, fails to point out the obvious. That won’t work. It would be disastrous/catastrophic, and it would take years to implement.
What will start, whenever China wants, will be their assault on Taiwan.
Or our backing off.
What will start, whenever China wants, will be their assault on Taiwan.
Or our backing off.
[ Remember, the 3-way relationship here was completely settled and stable for 50 years after Nixon and Kissinger went to China. There was no rational reason that the US should have purposely unsettled the relationship. ]
It’s like a three-body problem. (Two-body problems have relatively easy solutions. Not so with more than 2.)
If China, and the entity on Taiwan that calls itself the RoC, will agree to amicably co-exist, and the US & China also, then ‘peace will rule’.
China & US could just continue peaceful co-existence & co-dependency. No further discussion of technology theft, please. We’d just happily call it ‘sharing of ideas’.
“This is a silly article. I have yet to see the detail of the study to see if they discuss what the suppliers have to prove they can supply that the US needs to safely manufacture or provide….”
[ Having now found and gone through the original presentation, the presentation is silly-empty and the articles simply followed what was presented. Good grief.
Also, I am grateful for the Foreign Policy paper, but there is no effort taken by Walt to know China so the paper is again “silly.” ]
ltr:
People typically hired me because of my background in supply chain, its management (in other words I was more than just a manager), experience in other countries, ability to write, and my education.
China knows the requirements to ship product into the US. US buyers of foreign goods and materials know what certs are needed to obtain parts from overseas. Vietnam and Mexico are not supplying materials and goods without the COO documentation. Without such paperwork, they are liable for any material or product issue.
So, unless someone is committing fraud in the US in accepting misdocumented or no-documented materials; the article and paper are BS. I would refuse to place orders for the materials and probably lose my job. This is better than fraud, being sued, or going to jail. I would babble about it.
I have been through Asia many times, replaced my passport, etc. They are not stupid. And they always looked out for me and respected me.
I will be posting on TMSC again. The owner is trying to BS everyone.
China knows the requirements to ship product into the US. US buyers of foreign goods and materials know what certs are needed to obtain parts from overseas. Vietnam and Mexico are not supplying materials and goods without the COO documentation. Without such paperwork, they are liable for any material or product issue.
[ Surely so; and, of course, you are expert at supply management. ]
Y’know, the collective intelligence of nations, certainly including ours, often seems to be seriously inadequate to the tasks involved in keeping the planet healthy & happy going forward.
Democracies & autocracies both.
F’rinstance, if we were collectively smarter we would understand that the Monroe Doctrine at best had to end at the eastern edge of the Pacific Ocean. We would have stayed out of Hawaii, the Philippines, Japan, Korea, China, and Vietnam altogether. Probably not even a world power as things would have turned out. Maybe still practicing slavery.
The US (& hopefully the CSA) would’ve stayed out of WW1 & WW2. Generally not messed around in Europe. Or the Middle East. The world would be a much different place.
The last part of the above is probably a stretch. Slavery would probably have risen to the top of issues in the mid 19th Century, and what happened then would probably have transpired just as it did. Had little to do with Manifest Destiny. So, we would not have avoided the horrors of the Civil War, alas.
https://www.bnnbloomberg.ca/fed-latest-china-still-embedded-in-us-supply-chain-paper-finds-1.1963794
August 26, 2023
China Remains Embedded in US Supply Chains, Paper Finds
China remains embedded in US supply chains even as American firms have taken steps to reduce direct imports from the Asian country, according to a paper presented at the conference Saturday.
The paper’s authors, Laura Alfaro of Harvard Business School and Davin Chor of Dartmouth College’s Tuck School of Business, documented a decrease in the share of US imports from China and a corresponding increase in the share of US imports from Vietnam and Mexico between 2017 and 2022.
[ This, of course, means a cost increase for the end product consumer. ]