At a time when the newly elected U.S. President, Donald Trump, is making a pitch to re-shore manufacturing to America,
its companies operating out of China are having second thoughts about what was considered a miracle economy. Speaking at the World Economic Forum in Davos in January, Trump made a simple pitch that if companies invested in American manufacturing capabilities, then they would be subject to the lowest taxation. While Trump has not made good on his campaign pledge—a 60% blanket tariff on Chinese merchandise—he has threatened imposition of a 10% levy from February 1 if Beijing does not act on the exports of ingredients for fentanyl, a harmful synthetic opioid. Among the first Presidential orders that he signed was a comprehensive review of trade with China, including supply chains that use other countries to evade exposure to tariffs.
Given these rising geopolitical tensions, a record number of American corporates—as many as 30%—are either contemplating shifting out some operations from China or are already in the process of relocating elsewhere, revealed the annual survey by the American Chamber of Commerce in China. This exodus of America Inc from China is twice as big as in 2020, when the Covid-19 pandemic had led China to impose strict lockdowns as a response to the contingency.
