Go into a store and pick up any object, and there’s a good chance it will say “Made in China”. U.S. manufacturers have been producing goods in China for about the last 30 years due to cheaper costs. Convincing US businesses to return production to America has been a focus of the current administration since the inauguration of President Trump in 2017.  Among other elements, tariffs placed on Chinese-imported goods (goods sold by American companies but produced in China) have proven to be a moderately effective endeavor. A Kearney China Diversification Index, as described in in Forbes (“New Data Shows U.S. Companies Are Definitely Leaving China”), tracks the shift in U.S. manufacturing imports in Asia. As of 2013, China made up almost 67% of Asian goods imported by the United States. By 2019, the number had been reduced to 56%. What had been the beginning of a slow exodus of U.S. manufacturers from China could now become greatly accelerated due to the coronavirus outbreak. 

The United States imports a vast majority of its personal protective equipment (PPE) from China—equipment ranging from hazmat suits and rubber gloves to masks and even ventilators. As countries such as Italy are discovering as they now attempt to repurchase their own donated PPE back from China, is that reliance on the People’s Republic for key medical supplies and equipment as a long-term strategy poses significant risks.  This is a threat that the U.S., too, faces. In a conversation regarding the potential of U.S. companies leaving China, Charles Freeman, senior vice president for Asia at the U.S. Chamber of Commerce, recently stated he believes that companies will begin “rethinking the safety and security of reliance on global markets”, pushing these companies to return to American soil. He states that these companies are determining the consequences of relying on one market for supplies. As hospitals continue to wage war against the virus, their need for medical equipment has only ever been increasing, forcing companies like GM and Tesla to make ventilators and others like My Pillow and Eddie Bauer to make medical masks.

There are plenty of factors that come into play as to whether U.S. companies will make the big move back to the United States from China, but the coronavirus pandemic has begun to push these companies even further into rethinking their situations. There may not be a sudden departure of companies immediately out of China, but the coronavirus has put pressure on companies to rethink their priorities, and the United States has seen the need to have manufacturing of such products like PPE equipment nearby and in a safer market in case of another global pandemic. An opportunity may arise for the government to encourage U.S. manufactures in both the healthcare sector and other sectors to reconsider the current production locations. The next few years may prove interesting in the manufacturing sector, and an increase in products “Made in the U.S.A” might not be so far out.

~Michael Urpi

Sources:
https://www.forbes.com/sites/kenrapoza/2020/04/07/new-data-shows-us-companies-are-definitely-leaving-china/#6d06f9ae40fe
https://www.foxbusiness.com/markets/coronavirus-us-companies-china-operations