Trump admin tariff threats spur exodus of manufacturers from China

Electronics makers are shifting manufacturing from China in order to side-step Trump administration tariffs…

Debby Wu for Bloomberg:

Even the unseasonable downpour couldn’t dampen the spirits of the executives and officials gathered on the Indonesian island of Batam to cut the ribbon on a new Pegatron Corp factory… This low-key July ceremony to launch a manufacturing outpost marked a critical first step into Southeast Asia for one of Apple Inc.’s most important suppliers. It also encapsulates a fundamental move of electronics production, set in motion by the escalating U.S.-China trade war, that may hurt the world’s No. 2 economy while enriching Southeast Asia and beyond… [as it spurs] an exodus from China of manufacturers.

Some recognize that U.S.-Chinese tensions won’t fade soon, while others are just tired of the uncertainty. In one of the most dramatic responses since Trump first brandished full tariffs, HP laptop-maker Inventec Corp. declared plans to move its entire U.S.-bound laptop operations from China to its home base of Taiwan within months.

Like Pegatron, the makers of the world’s electronics are increasingly rushing out of the way of Trump-administration tariffs on Chinese-made goods. Server motherboard makers for Google and Inc. are already shifting to Taiwan. Even Apple Inc., whose gargantuan Chinese production machine hires more people than any other private employer, is testing the waters. GoerTek Inc., for one, is trying out production of AirPods in Vietnam, people familiar said…

Foxconn will start to churn out iPhones in [India] this year after its print circuit board affiliate and Apple supplier Zhen Ding Technology Holding announced plans to invest there late last year. Luxshare Precision Industry Co., another Apple supplier, is considering moving some production of cables and connectors to India as well, according to people familiar, with one saying Apple made the request to the Chinese company.

MacDailyNews Take: Prime Minister Narendra Modi’s Make-in-India program is showing success as the world’s supply and assembly chains reorganize.

As the pressure ratchets up, it will hopefully ultimately lead to a better balance.

I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018

At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006


    1. Amazing. MDN thinks Trump is “winning” if Pegatron and a few other Apple suppliers relocate from China to Taiwan or Indonesia. Low skilled US workers, pack your bags, there’s a new factory and it’s hiring … over there!

      An objective observer would see that the current administration has no coherent policy in Asia. Strongman wannabe has no answer to the obvious: many low-wage Asian nations are happy to support sweatshops for US corporate giants, and US corporations have absolutely no patriotic bone in their corrupt bodies. Trump’s self-serving economic advisors were so stupid, they didn’t realize that China would simply devalue the yuan to maintain a competitive manufacturing cost. Trump thinks so short term that he just now realized that his Xmas shopping would get more expensive this year, so he kicked his consumer tax down the road for political reasons. He has absolutely no means of decreasing prices for the US. In fact, under Trump’s nose, the cash trade imbalance he hates has only increased. That won’t change under his administration, nor anytime soon, with the price of oil also depressed, US corporations have determined it’s still cheaper to ship junk around the world — from whatever Asian country gives them the special deals — than to hire Americans.

      Is all this good for Apple? Doubtfully. Change costs might be pocket change to Apple but with so many moving parts, there could be supply problems. Timmy should have already been diversifying his supply base, but it’s clear he’s got no interest in doing so. Apple suppliers are calling the shots, not Timmy. Timmy is busy playing Hollywood dealmaker and Wall Street Banker.

      Good luck, Taiwan. Cheap consumers hope your nation of 24 million people will be able to save Apple some money while China, a nation of 1.4 billion people, strategises its path to dominance over the next century. China isn’t going to let other nations impede its path, including the formerly great US (Trump’s assessment, not mine).

          1. MDN hasn’t offered Mac centric news in years. Acting as a shill for Drumph is their core mission now. Apple and the current administration are directly opposite in trade policy but MDN uses every opportunity to repeat Trump rhetoric while ignoring the real reasons— outsourcing to China— why Apple prints money so fast. Same as every large corporation. Hypocrite MDN wants you to buy Apple stuff made in China, while Trump penalizes American consumers. Their answer, being the unprincipled self-proclaimed conservative idiots they are, is to provide Apple special favors while screwing other companies. That is the very definition of cronyism. Mussolini would be flattered.

        1. He’s right though. Trump tells you he is winning nonstop, he just doesn’t tell anyone the game or the rules. Eventually everyone who does business with Trump gets left holding a bag of manure while Trump declares bankruptcy and moves on to the next business deal. The voters he conned are now facing an avoidable recession entirely driven by disastrous isolationist politics driven by Trump. The taxpayers are not winning, they are being distracted with a reality show bubblehead. Trump ever understood or played by the rules in his privileged self serving pathetic life.

      1. Man you are such a massive asinine loser .
        .. and part of that reality is being completely blind to your foolishness !
        But the consolation are not alone.

      2. “Amazing. MDN thinks Trump is “winning” if Pegatron and a few other Apple suppliers relocate from China to Taiwan or Indonesia.”

        President Trump is winning and to say “few” is condescending. One company leaving is a Trump victory and we know the number is higher and certainly will grow. Sorry that you can’t handle the presidents success and resort to drifting into the weeds with tedious speculations and opinions. Keep this in mind, Trump does not need your approval to be successful…

      1. Keep praying Goeb. You and your retirement savings are going to need it.

        Why again is it that every Republican president is a mega deficit spender (shhhh, don’t tell, that’s a secret MAGA hats never learned) that drives the economy off a cliff???? Every single Republican since Nixon has royally F’d up the economy before leaving office. Look it up. Democrats meanwhile are only marginally better, but at least since Johnson, Democrats spend at home instead of playing expensive military games all over the freaking planet.

  1. Boo hoo. We need to think a little more longterm, and we have absolutely needed to wean ourselves of of the Chinese teat. I don’t see anything here but corporate goons crying into their cereal.

  2. Great news. All US companies should exit China. There is no good reason to support China. Doesn’t matter what you think of Trump or his motives the truth is that he’s the first world leader to push back against China with some force. Whine all you want but to fix the mess that passive leaders have allowed it’s going to hurt some and it won’t get better by taking the easy way. The bottom line is that China has been stealing from the US and companies around the world. Cut off their money and let them wither until the communist government dies. Then return to China and help the people build a better country of their choosing.

    1. Yes, everyone should exit China. And have their products manufactured in OTHER countries… by Foxconn and Pegatron… which are Chinese companies… so their dollars are still going to China. So, “I guess there’s no good reason to support China” other than the ONLY companies operating at the scale to be able to stand up new factories anywhere in the world are Chinese companies.

      Huh, how is doing business with Chinese companies outside China different from doing business with Chinese companies INSIDE China? Does it just make you feel better to know that the company spent some fraction of their enormous wealth to build token factories outside China?

      Anyone planning on manufacturing anything in a large quantity will be using a Chinese company to do so for years to come. And there’s really nothing you can do about it.

      1. Wrong Again, I’m afraid you are wrong again. Neither Foxconn nor Pegatron are Chinese companies. They are Taiwanese companies that have plants in Taiwan, mainland China, the US, and dozens of other countries. Just because they look like residents of the People’s Republic does not make them so.

    2. “Doesn’t matter what you think of Trump or his motives the truth is that he’s the first world leader to push back against China with some force.“

      Spot on! The smartest comment on this post. You will never see it reported on CNN, MSNBC, or read it in the New York Times or the Washington Post. The DESTROY Trump media is simply incapable of fair and balanced journalism the DAY he won the election. That’s OK, their numbers are consistently declining and will continue…

    1. It is working! The retirements of millions of Americans will shrivel up! Farmers will holler for more bailouts! Recession driven by stupid isolationist policy makes Drumph feel great! Consistent 2-4% GDP growth for the last decade was very very very bad, so let’s dig a 1.4 trillion budget deficit, scream for Fed rate reductions, and deliver a 1-2.6% GDP increase. The trumpets will find a scapegoat, they always do.

      Did China return the IP stolen from gullible US companies? Let me know when that happens. They can staple it to the back of Drumph’s promised tax returns, which, believe him, are bigly great. He would love to show you all the oligarchs that rent his hotels, but he’s too busy whitewashing his Epstein deals right now. You don’t think he met his imported wives at church, do you?

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