Policymakers and talking heads point to new supply hubs in Mexico, Vietnam, Thailand, and East Europe as evidence that supply chains are moving out of China, and to companies in friendly countries.
But a comprehensive survey by the Bank for International Settlements, and analyses by the Wall Street Journal, indicate that it is still Chinese companies who are the primary suppliers; they have instead relocated to avoid tariffs, and to allow end buyers to pretend they are finding non-Chinese suppliers. In so doing, our supply chains now are actually MORE dependent on China, and ironically more dependent on China's relationships with other countries, instead of just ours. Further, that the "interpositioning" of companies to trade indirectly and thereby avoid tariffs makes the supply chain more risky--not less--and much more expensive.
Resources and links:
Wall Street Journal, ‘Derisking’ China-Reliant Supply Chains Is Creating New Risks
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Bank for International Settlements, Mapping the realignment of global value chains
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Wall Street Journal, U.S. Companies Are Finding It Hard to Avoid China
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