Trump pushing to rip global supply chains from China?
WASHINGTON: The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China as it weighs new tariffs to punish Beijing for its handling of the coronavirus outbreak, according to officials familiar with US planning.
President Donald Trump, who has stepped up recent attacks on China ahead of the Nov 3 US presidential election, has long pledged to bring manufacturing back from overseas. Now, economic destruction and the massive US coronavirus death toll are driving a government-wide push to move US production and supply chain dependency away from China, even if it goes to other more friendly nations instead, current and former senior US administration officials said.
“We’ve been working on [reducing the reliance of our supply chains in China] over the last few years but we are now turbo-charging that initiative,” Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the US State Department told Reuters.
“I think it is essential to understand where the critical areas are and where critical bottlenecks exist,” Krach said, adding that the matter was key to US security and one the government could announce new action on soon. The US Commerce Department, State and other agencies are looking for ways to push companies to move both sourcing and manufacturing out of China. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, the current and former officials told Reuters.
“There is a whole of government push on this,” said one. Agencies are probing which manufacturing should be deemed “essential” and how to produce these goods outside of China.
Trump’s China policy has been defined by behind-thescenes tussles between pro-trade advisers and China hawks; now the latter say their time has come. “This moment is a perfect storm; the pandemic has crystallized all the worries that people have had about doing business with China,” said another senior US official. “All the money that people think they made by making deals with China before, now they’ve been eclipsed many fold by the economic damage” from the coronavirus, the official said.
Economic prosperity network
Trump has said repeatedly that he could put new tariffs on top of the up to 25 percent tax on $370 billion in Chinese goods currently in place. US companies, which pay the tariffs, are already groaning under the existing ones, especially as sales plummet during coronavirus lockdowns. But that does not mean Trump will balk at new ones, officials say. Other ways to punish China may include sanctions on officials or companies, and closer relations with Taiwan, the self-governing island China considers a province.
But discussions about moving supply chains are concrete, robust, and, unusually for the Trump administration, multi-lateral. The United States is pushing to create an alliance of “trusted partners” dubbed the “Economic Prosperity Network,” one official said. It would include companies and civil society groups operating under the same set of standards on everything from digital business, energy and infrastructure to research, trade, education and commerce, he said. —Reuters