The best course is to plan for increasing U.S.-China tensions and shift from sole sources of supply.
An evil, expansionist China matters to countries which cherish basic human rights. Americans, along with our western allies, value their right to choose for whom they vote, read and give different points of view, practice their religion, maintain their privacy, and marry whom they want. Our very way of life relies on these freedoms and China’s growing economic success, expansionism and increasing repression globally threatens these rights.
President Trump's administration acted forcefully against China, but focused mostly on China's economic threat. Trump did penalize Chinese companies for building technology enabling the Uyghur concentration camps but rarely spoke about China's human rights abuses. Trump focused mostly on economic issues with bluster, bravado and harmful tariffs. In fact, his unpredictable actions did more to drive business crazy then accomplish any real dent in Chinese policies. But Trump deserves credit for accelerating the move of many companies to build products in Vietnam, Indonesia and other countries. However, few if any companies moved manufacturing back to the U.S. Trump did create a couple of partial trade deals with China which appear to have been more bravado than substance and in any case the agreement's ambiguity and COVID may have cleansed the Chinese commitments to buy more U.S. goods.
Candidate and President Biden vowed to rein China in and shift manufacturing to the U.S. with a combination of tax and other incentives. The Biden administration has identified certain high-tech categories as important for national security worthy of a type of industrial policy with government investment. President Biden has implied he is in no hurry to remove the Trump tariffs from products imported from China. He seems eager to put Chinese human rights and labor abuses on the table. But President Biden thus far has barely spoken in public on most issues. As of this writing he has not held a press conference since January 20, seems overly controlled by his aides, and appears to be more focused on domestic issues and putting out national security fires.
In any case, more shoes will drop unless China unexpectedly shifts its human rights and mercantilist approach to the world. With politicians and Americans united on the threat from China and President Biden most responsive to American unions, we should expect increasing roadblocks on importing products from China. The best course is to plan for increasing U.S.-China tensions and shift from sole sources of supply.
President and CEO
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