Another Trump Tariff Success Story: Vietnam
Tariff costs prompt executives to shift production to other countries; ‘Once you move, you don’t go back’ is the often head claim.
As a result of Trump's tariffs, Manufacturers Move Supply Chains Out of China but who is the beneficiary?
Companies that make Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras are producing goods in other countries to avoid U.S. tariffs of up to 25% on some $250 billion worth of imports from China. Apple Inc. also is considering shifting final assembly of some of its devices out of China to avoid U.S. tariffs.
Furniture-maker Lovesac Co. is making about 60% of its furniture in China, down from 75% at the start of the year. “We have been shifting production to Vietnam very aggressively,” said Shawn Nelson, chief executive of the Stamford, Conn., company. Mr. Nelson said he plans to have no production in China by the end of next year. “Once you move, you don’t go back,” Mr. Nelson said.
Yeti Holdings Inc. said it plans to move most production of soft-sided coolers out of China by the end of this year. iRobot Corp. said it would start producing Roombas in Malaysia this year, too. Crocs Inc. CROX 2.54% said it expects less than 10% of U.S.-bound products to be made in China by next year, down from 30% in June. And diesel-engine maker Cummins Inc. said it has avoided $50 million in tariff expenses by moving some production to the U.K. and other countries.
Imports from China fell 12% in the year through May compared with a year earlier, according to the U.S. Census Bureau, the biggest decline since the financial crisis a decade ago.
The biggest beneficiaries of that decline have been other countries in Asia where production costs are low, such as Vietnam, India, Taiwan and Malaysia. Many of those countries have seen sharp increases in exports, although there have been allegations that some of that added traffic was due to goods made in China that were routed through those countries without significantly altering them to avoid tariffs.
Detriment of China?
Read that last paragraph carefully.
To be sure, China has taken a hit, but likely not to the extent reported.
Who else suffered? You get one guess.
US Poor Suffer Most From Trump Tariffs
Bloomberg reports Trump’s China Tariffs Hit America’s Poor and Working Class the Hardest
The burden of import taxes is five times as heavy for the bottom tenth of households as for the top tenth.
The New York Times reports Trump’s Tariffs Could Nullify Tax Cut, Clouding Economic Picture
President Trump’s tax cuts provided a temporary jolt to the United States economy by putting more money into taxpayers’ pockets. The tariffs that Mr. Trump has grown so fond of may have the opposite effect.
Two new analyses show that the tariffs Mr. Trump is using to punish China, Mexico, Europe and other governments would more than wipe out any gains from his $1.5 trillion tax cut for low- and middle-income earners, leaving them with less money to spend into a consumer-driven economy. Higher earners would fare only slightly better, with their tax gains significantly eroded but not entirely washed away.
What Do We Call This?
Inquiring minds might be wondering what we call this.
The Cato institute says Trump on Tariffs: Consistent, and Consistently Wrong.
Everyone by now should know we call this "winning".
Without a doubt, Vietnam is very impressed with this Trump "win".
Mike "Mish" Shedlock