Home / US / Trump "herewith" orders American business from China. Can he do it?

Trump "herewith" orders American business from China. Can he do it?




Photo by Nicholas Kamm / AFP / Getty Images (Nicholas Kamm / AFP / Getty Images)

President Trump's extraordinary edict demanding US companies move out of China – delivered in a series of angry tweets Friday – leaving industries in every rand distortion to understand how seriously one would take the order and how the White House can execute it.

Companies from retail to electronics to home environments, many already under pressure from a months-long US-China trade war were contacting their industry associations for guidance and waiting for more substantive announcements from the White House.

"I try to stay cool and not get upset and upset, but it gets difficult," said Magi Raible, founder of LiteGear Bags, a luggage maker based in Vallejo, California

She has a meeting next week with a business colleague to discuss moving more of its manufacturing from China to India or South Africa, she said. "I don't know how much faster I can move or how much more urgent I can have," she said.

President Trump is not authorized to "properly order" companies to leave China, according to Jennifer Hillman, a Georgetown University law professor and trade expert at the Foreign Relations Council.

He has power under international emergency law to prevent future transfers of funds to China, "but only if he has first made a legal declaration that there is a national emergency, she said.

Congress could terminate "If all this happened, it would not give authority over all US investments already made in China," Hillman said.

Other trade experts said Trump has powerful tools at his disposal to encourage companies to leave.

They include continuing to raise tariffs on imports from China, which Trump did again on Friday. The White House could also try to punish companies by suspending them from federal procurement agreements, economists said.

tweet is not quite cheap talk, "said Derek Scissors, a China expert at the American Enterprise Institute, a center of thought partly funded by industry.

Trump fired the tweets after China introduced a new round of $ 75 billion US revenues on Friday.

"We don't need China and frankly it would be much better without them," Trump wrote. "Our fantastic companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the United States."

The announcement made public what Trump has been telling private companies for more than two years, William said Reinsch, a trade expert at the Center for Strategic and International Studies

"The reality is that many companies have been considering leaving, anyway," Reinsch said. "Labor costs are rising in China, the regime is repressive and US companies continue to face discrimination," he said.

Some apparel and electronics manufacturers have moved out of China, which was recently driven by the US dropping ever higher import duties on goods manufactured in China.

But few of these companies have moved jobs back to the United States. they have moved to other low-cost countries like Vietnam or Bangladesh.

Other industries that would like to leave China say that t they have found it difficult to find manufacturing of the same quality and low costs elsewhere. [19659019] "Businesses would love to find alternative sources, but it can't happen overnight," said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation. "And even when it does, unfortunately, not much of it [manufacturing] returns to the United States. We agree that China has been a bad actor, but we have to come back to the table and work out a trade agreement. "

Some analysts saw Trump's tweets as a particularly aggressive move against Apple and other tech companies, which manufacture many of their goods in China. Dan Ives of Wedbush Securities called Trump's command "a clear shot across the arc at Apple and the semi-space," citing the semiconductor sector.

For decades, Apple has become intertwined with China's electronics assembly infrastructure to a degree that is extremely difficult to undo. In a best case scenario, it would take Apple five years to move just half of its iPhone production from China, Ives said.

In many ways, Apple's rise from an even in the personal computer market to one of the most valuable companies on the planet was due to its partnership with Foxconn, a Taiwanese juggernaut that manufactures in China.

Apple may have come up with the ideas for its consumer products, but Foxconn founder Terry Gou made them a reality in the early 2000s by leveraging China's manufacturing capabilities to build elegant devices at such a low cost that they were also profitable .

Apple has toyed with mounting products outside of China in the past, built a relatively small number of desktops in the United States and exploring iPhone manufacturing in India and Southeast Asia, but the company is still heavily dependent on China.

Apple chief Tim Cook has been among the friendliest to Trump by the great technologist and CEO, repeatedly with the president to discuss trade policy. Even as some leaders in the tech industry have been criticized for engaging with Trump, Cook has constantly engaged and even served in the labor consulting, chaired by Secretary of Commerce Wilbur Ross and Ivanka Trump, the president's daughter.

After tweeting about a new dinner with Cook, Trump praised the CEO in front of reporters earlier this week and told them that Cook is calling him when there are problems. "Others go out and hire very expensive consultants, and Tim Cook calls Donald Trump directly," Trump said.

Because of its large size, China is also an important market for iPhone sales, which aggravates Apple's reluctance to disrupt its manufacturing presence there. In the third fiscal quarter of 2019, the country was responsible for $ 9.19 billion of Apple's revenue, compared with $ 25 billion in America.

Many other industries also rely on China. Delta Children, a US manufacturer of baby furniture, manufactures about 80 percent of its products in China.

Joe Shamie, the company's president, said that in recent months he has been trying to move production to other countries, including Indonesia, Malaysia and Vietnam, but says factories in those countries are already saturated with orders.

He also tried to find ways to make mattresses in the United States, but said he would need about $ 1 million in machinery from China, which is now subject to the Trump administration's last 25 import duties.

"I'm trying my best, and now you want to tax me on the machines I need to manufacture in the United States? It's really smart, he said. "This has been a disaster."

Columbia Sportswear says it began moving its manufacturing from China about 15 years ago when cheaper alternatives appeared in other parts of Asia and Africa. The company now comes from 19 countries, but still receives about 10 percent of its imports from China.

"It's not the cheapest place in the world to do things anymore, but the goods that still come from China are very specialized and can't be moved easily," said Timothy Boyle, the company's chief executive.

LiteGear Bags were used to manufacture all luggage and accessories in China. In recent months, founder Raible says she has spent tens of thousands of dollars to move about one-third of the company's operations to Cambodia. [19659035] "It was an extremely difficult process," she said. "It took them months to gain momentum. I mean, this was a factory that made sunglasses bags and all of a sudden I ask them to make shoulder bags, pack g cubes and backpacks."

The majority of her products continue to come from China, and she said the Trump administration's duties have caused import duties to 42.6 percent for many of her goods, up from 17.6 percent less than a year ago. She had to terminate her staff at six, and now relies on hourly suppliers to help with accounting, shipping and graphic design.

"I struggle with tooth and nail to hang on," she said.

Trump himself has long used foreign manufacturing, especially in China, for the production of Trademark Trademarks "Trump".

In the retail business run by the Trump organization on the back of Trump's DC hotels, golf jackets and travel coffee mugs Trump names and manufactured in China are still being offered to for sale, along with other products produced in Indonesia, Vietnam and other countries.

A Trump spokeswoman, Amanda Miller, did not respond to a request for comment on Friday whether the company would stop selling or producing Chinese products in response to the president's directive.

Trump still owns his business but it is managed by his adult sons, Donald Trump Jr. and Eric Trump while on duty. [19659042] Amid criticism of Trump's companies for continuing to rely on imported goods while Trump resorted to others to do so, the Trump Organization began offering more goods clearly labeled "Made in America", including T-shirts and hats. On its store page, Trumpstore.com, the company now displays a section "Made in America".

During the presidential campaign, Trump responded to a question about why he imported products by saying "We can do it … But I am the one who knows how to change it."

Jonathan O & # 39; Connell contributed to this article.


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