The response by U.S. businesses was swift: Many relocated at least some of their production from China to countries like Vietnam, India, and Mexico, which weren't in Trump's economic crosshairs.
Now, with Trump's second term underway, the tariffs plan is again on the table. But this time, he's promised an expanded version that, if implemented, would create even more corporate upheaval and turn some previously winning countries in his trade war into big losers.
“Trump Two is not Trump One,” warns Deborah Elms, head of trade policy at the Hinrich Foundation, a Singapore-based think tank that advocates for sustainable global trade. “I’m not convinced that everyone recognizes the extent of the danger. It’s going to catch a number of folks in the region really off guard.”
Trump’s specific road map for reshuffling global trade will emerge in the months and years ahead—or perhaps there will never be a map, leaving business leaders in the dark on a critical issue impacting their all-important planning. What is clear from his previous dance with tariffs is this: Even after nearly a decade of tensions with China, U.S. companies still haven’t been able to find a replacement for Chinese manufacturing.
In reality, Trump's tariffs-largely unchanged under President Joe Biden-accelerated a transition from China that was already underway. Companies had already started to move lower-value manufacturing, like textiles, to other countries as labor there became more expensive. “A lot of this diversification was the Chinese factories themselves, picking up their equipment and moving the whole thing to Vietnam and Cambodia,” says Joe Ngai, chairman for the Greater China region at consulting firm McKinsey.
Beijing's harsh COVID-era lockdowns, which closed factories nationwide and snarled the country's well-oiled supply chain, added even more urgency to the shift. U.S. companies realized that they didn't want to depend too much on a single country.
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