Where Will Companies Go If Trump Launches a Three-Way Trade War?
Mexico, China, and Canada. This could potentially lead to higher prices for consumers as companies look to relocate their production to other countries.
Mexico, China, and Canada accounted for over 40% of the total value of US imports in 2022. Trump has proposed imposing additional tariffs on these countries, which could incentivize companies to move their production elsewhere. However, experts believe that this is unlikely to cause a significant increase in domestic production.
Several countries are likely to be considered by companies looking to relocate their manufacturing. Vietnam is a top contender due to its relatively low manufacturing costs. However, if many companies move there simultaneously, it could lead to increased production costs and supply chain bottlenecks.
European nations like Germany could also benefit from the trade war, as they have their own production capabilities for motor vehicles. Similarly, Japan and South Korea, which are major players in the car manufacturing industry, could also ramp up production.
For apparel and shoes, Indonesia, Bangladesh, and Cambodia are likely to see an increase in demand. Italy may also experience higher production demand for luxury footwear and apparel.
Taiwan and other Southeast Asian countries like Malaysia, Thailand, Vietnam, South Korea, and Japan could also see an increase in electronics manufacturing. These countries have a currency advantage and are already exporting more electronic goods to the US.
India is a less likely option for companies looking to relocate their production, as most of its manufacturing is focused on meeting domestic demand. However, Apple has recently moved some of its production to India, so it is a possibility.
Many companies may choose to stay put, even with higher tariffs. They may have existing contracts or find it cheaper to absorb the tariffs than to relocate.
The trade war could have a significant impact on the US economy. It could lead to higher prices for consumers, job losses, and a decrease in economic growth. It is important to carefully consider the potential consequences before implementing such a policy.