Leading U.S. firms demand an end to the trade war
Tom Fowdy
["china"]
Editor's Note: Tom Fowdy, who graduated from Oxford University's China Studies Program and majored in politics from Durham University, writes about international relations focusing on China and the Democratic People's Republic of Korea (DPRK). The article reflects the author's opinions, and not necessarily the views of CGTN.
On Tuesday evening, over 170 American leading footwear brands and businesses signed a letter demanding President Donald Trump end his trade war with China, warning of "catastrophic" costs on American consumers.
The letter, signed by worldwide names such as Nike and Adidas, warned in explicit terms that the president's tariffs would lead to a surge in prices for working-class Americans, pose severe risks for their enterprises and described the levies as "unfathomable." The letter rounded off with the firm declaration that it was "time to bring this trade war to an end."
The letter is the most decisive response and astute warning yet by American businesses concerning the impact of the trade war. Although the president has tried to justify the increase in tariffs by claiming that America is "making money from the tariffs" and that "production can be shifted elsewhere," these claims are inherently misleading. 
With U.S. businesses so deeply integrated into supply chains reliant upon China, the president has in fact sold the public a lie pertaining to the trade war. As a result, as he continues to rip up U.S.-China economic ties, it is the American people themselves who will bear the brunt of his policies.
A Nike employee stands in the entryway of the Nike SoHo store in New York City, June 15, 2017. /VCG Photo

A Nike employee stands in the entryway of the Nike SoHo store in New York City, June 15, 2017. /VCG Photo

What does Trump tell his voters that U.S.-China ties are all about? According to the president, China has such a huge trade surplus with America simply because "it cheats" at trade. Through apparent state-sponsored industries, the president has claimed the Chinese have "stolen" American jobs and want to sell everything without buying from American industries, so they keep winning and because of bad U.S. leadership, Washington keeps "losing." Therefore, the answer is to "tariff" China so that the U.S. can make "money" from the levies whilst also "bringing back jobs."
The reality is this couldn't be further from the truth. American companies have in fact invested in Chinese production themselves, rather than such being an orchestrated move against American businesses by Beijing. With China's enormous and inexpensive labor force, combined with an enormous domestic market and global export market, producing goods in China has been cheaper and more cost-effective than anywhere else on Earth.
Therefore, over the last few decades, many U.S. companies decided that they could save money and bring down their own costs and prices by investing in Chinese production. The accumulative result is that entire supply chains have become integrated into specific regions of China.
As a consequence, as the letter to Trump notes, to simply "move production elsewhere" is not a quick fix solution to the trade war. An integrated supply chain after all consists of not just one, but numerous companies and providers located in a geographically convenient location. If one import-focused company chooses to move production, then it is ripping itself out of an entire algorithm and imposing huge costs upon itself.
It has to find not only a new set of partners but also an area which actually offers the infrastructure and established ground to produce what it needs. This requires massive investment. But even if it can do that, is there any guarantee it can be more cost-effective than what is established in China?
Let's take Vietnam as an example. Vietnam can be a manufacturing base, yes. But does it have the existing global export goods market, manufacturing infrastructure and domestic consumer demand that China has in order to make your prices competitive? Not yet it doesn't. This means a country like that may be an option for a long-term investment with a few years to a decade, but it is not a short-term wish list that can mitigate the dramatic imposition of tariffs. It would take considerable time and resources for companies to rebuild supply chains there.
Vietnamese workers prepare incense sticks at a workshop, January 4, 2019. /VCG Photo

Vietnamese workers prepare incense sticks at a workshop, January 4, 2019. /VCG Photo

The overall point of this example being? The U.S. president is telling lies and as the business letter notes, companies cannot simply "leave" China so easily, especially when the focus of exports from those supply chain rhythms are not just the U.S. alone, but the entire world, meaning to just "leave" tears up global markets. 
As a result, the costs of the tariffs imposed upon American businesses and consumers are unavoidable. This letter is not bluffing, but it is a cold and unavoidable business fact. Things are going to get more expensive, that is that.
Thus as a whole, this letter to the White House is a stern and unmistakable reminder that it is in fact U.S. businesses that have benefited from ties to China, rather than the misleading claim that Beijing is ripping off American businesses. Ultimately, economics in the contemporary world is transnational and interdependent, far from the juvenile and opportunistic rendering of the zero-sum "country vs. country" game that Trump renders it to be. Now, the price of it all is firmly being set on the table, and it will be coming out of the consumer's, rather than China's, pocket.
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