image

Donald Trump

Trump should heed carmakers’ warnings: trade war will not bring manufacturing back to the US

PUBLISHED : Monday, 01 October, 2018, 6:01am
UPDATED : Monday, 01 October, 2018, 7:30am

US President Donald Trump’s latest round of tariffs on US$200 billion worth of Chinese goods came into effect last week (“US-China trade war ramps up as tariffs on US$200 billion in Chinese imports take effect”, September 24). Trump believes that the trade war will end with all American goods manufactured on American soil. While this sounds like a tantalising outcome, with due respect, I think it is nothing more than telling Americans what they want to hear.

At the end of August, Ford, one of the US’ leading car manufacturers, cancelled plans to import its latest Focus Active model into the US market in light of the escalation in Trump’s trade war. In response, Trump tweeted that this implied the return of Ford’s manufacturing base to the US so that the cars would not be subject to tariffs.

However, Ford clarified immediately that it would not manufacture the Focus Active model in the US, seemingly a slap in the face of Trump’s enthusiasm.

Meanwhile, Ford has plans to build other cars in China. Even the tariffs on imports from China won’t justify Ford moving its manufacturing operations back to the US, given the high costs, and so those jobs will not be returning to the US as Trump expects.

Watch: Tesla announces plans for first overseas plant in Shanghai

Earlier, another car giant, General Motors, which has 180,000 employees worldwide, also warned that tariffs would lead to a “smaller GM”, less investment, reduced competitiveness and fewer jobs for the US.

Meanwhile, the Chinese government has imposed tariffs on US goods too. Thus, sales of US products in China will be affected.

Finally, let’s not forget the upside of having a global supply chain. Over the past few decades, US products have been made in China at very competitive costs, meaning that US consumers enjoy goods at attractive prices, which translates into higher profits for US companies and in turn benefits the US economy.

China ‘supports millions of American jobs, makes big profits for US firms’

By and large, this is a win-win situation. No wonder experts blast Trump for his lack of basic understanding of international trade.

Even though Trump has no intention of backing down, China is keen on tit-for-tat economic reprisals. China is still looking for ways to settle the trade dispute.

Holden Chow, legislative councillor, Democratic Alliance for the Betterment and Progress of Hong Kong