Trump Tariffs Driving Businesses Out of China

Well, they’re working. We know that.

Trump’s trade spat with China isn’t killing business, but it is hurting.  To get around the 25% tax, some businesses are taking the drastic step of moving some production out of the Middle Kingdom.

Like other companies, Apple is testing production of its AirPods in Vietnam, which has long since been the production home of the company’s EarPods.  Until now, the more expensive, and complicated, AirPods were only made in China.

The strategy to add another manufacturing site in Asia outside of China has become so common as to get its own name, “China plus one.”

Under the strategy, manufacturers develop another site in Asia, but don’t move so much production away from China as to cause a flap.  Even the Apple facility will operate at a small, trial level, trying to prove out the viability of operations in Vietnam.

But there’s no denying that once a facility has been constructed and a supply chain has been put in place to support production away from China, it would be odd to see all of it move back to China after the trade war is settled.

These are losses for China that will never be recouped.  In this way, President Trump is making good on his promise at least to reduce, if not end, our trade reliance on that country.

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