President Donald Trump’s tariffs are driving some manufacturing out of China, but much of it remains outside of the United States.
Instead, a number of other countries are benefiting from Trump’s trade war, according to data released by the Census Bureau on Thursday.
US imports from Vietnam are up 38% during the first four months of 2019, compared to last year — suggesting that US importers are finding ways to buy from suppliers there. Imports have also increased by 22% from Taiwan, 17% from South Korea, and 13% from Bangladesh, the government data shows.
Americans are importing about 12% less from China, a shift that comes after a year of inconclusive trade negotiations.
Trump has lately expanded his trade war to include Mexico, which he’s threatened with 5% tariffs starting on Monday. Tariffs are paid by importers, who can choose to eat the costs or pass them on to consumers, though in some cases overseas manufacturers cut their prices, too.
The President has repeatedly claimed that his tariffs will prompt manufacturers to bring production back to the US, a core campaign promise.
“The higher the Tariffs go, the higher the number of companies that will move back to the USA!,” he tweeted this week.
Yet he’s also acknowledged that his trade wars are driving manufacturing elsewhere — which dings China but doesn’t do much for American consumers.
“Also, the Tariffs can be completely avoided if you buy from a non-Tariffed Country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs. Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!” Trump tweeted last month.
Many US importers, including those that sell hats, footwear and other apparel, rely heavily on China for those goods and component pieces. In some cases, the US doesn’t have the factories to produce what’s needed. Plus, wages are higher and the US labor market is tight.
“There is a litany of countries that footwear companies will consider before coming to the United States,” said Matt Priest, president and CEO of the Footwear Distributors and Retailers of America, adding, “The United States is really not an option.”
But other countries are. Footwear companies will likely first look to shift production to Vietnam, where some shoe manufacturing already exists and it’s easy to bring Chinese materials across the border, Priest said.
“I think this notion that everything has to be made here is ignoring the economic facts of the 21st century global supply chain,” he said.
Even before Trump began imposing tariffs, some production was moving out of China because of increasing wages there. US imports from countries like Vietnam and South Korea have been steadily increasing over the past decade.
“The current trade dispute is certainly accelerating that trend,” said Russell Price, the chief economist at Ameriprise Financial.
Trump has also inked a new trade deal with South Korea, opening up its market to US autos.
While Taiwan and South Korea are more focused on high-tech items like smartphones and semiconductors, places like Vietnam still offer competitive wages — making it an attractive place to make apparel and shoes.
