A Twist in the U.S. Tariff Battle: It's Helping China Be More Competitive
Comment of the Day

September 17 2018

Commentary by Eoin Treacy

A Twist in the U.S. Tariff Battle: It's Helping China Be More Competitive

This article by Liza Lin and Dan Strumpf for the Wall Street Journal may be of interest to subscribers. Here is a section:

Tony Lee’s Sintai Furniture Co. makes outdoor furniture and other products sold at Costco , Home Depot and other U.S. stores that would be subject to tariffs in the expected $200 billion round. He is moving one-fifth of production to Vietnam for his U.S. exports, and keeping production for European and other markets at his factory in Dongguan.

Mr. Lee said the company will incur higher costs in worker training and material shipment in the short term, but he expects the move will save money in the long run. “The supply chain and capability in Vietnam takes time to build,” he said. “Once it is built up, Vietnam will be cheaper than China.”

Eoin Treacy's view

China is moving up the value chain in terms of manufacturing and the increasing automation of production lines is a trend which has been underway for a decade. Simultaneously, rising wages have had an impact on apparel and footwear exporters which have migrated to places like Vietnam, Cambodia, India, Ethiopia and Kenya.

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