The Wall Street Journal is reporting that U.S. automakers are seeking a workaround to avoid increased expenses resulting from President Donald Trump’s controversial tariff policy: relocating manufacturing to China.
“Four major automakers are racing to find workarounds to China’s stranglehold on rare-earth magnets, which they fear could force them to shut down some car production within weeks,” the Journal reports. “Several traditional and electric-vehicle makers—and their suppliers—are considering shifting some auto-parts manufacturing to China to avoid looming factory shutdowns, people familiar with the situation said.”
China was facing the possibility of total collapse before the trade war, and they are more vulnerable than the US to the effects of the trade war.
I’m not saying the US will “win” the trade war, (no nation will be better off.) but if China comes through on top it will be analogous to Vietnam, where the US has every conventional advantage but political pressure at home forces capitulation.
Trump doesn’t know what he is doing, but there is a chance he gets his way more or less just because he was handed a deck stacked wildly in his favor.