The Finance 202: Trump tariffs could drive U.S. factories overseas
By Tory Newmyer
August 2 at 7:59 AM
THE TICKER
President Trump and Vice President Mike Pence meet with Harley Davidson executives on the South Lawn of the White House last year. (Jabin Botsford/The Washington Post)
President Trump’s tariffs threaten to throw his “America First” vision into reverse, prompting manufacturers to ship production and jobs overseas to dodge new trade barriers.
That’s one takeaway from the Institute for Supply Management’s July survey, which tracks sentiment among industry executives. It reveals a rising tide of alarm among manufacturers about the direction of the administration’s trade offensive — even before the White House announced Wednesday that it is considering hiking proposed tariffs on $200 billion of Chinese imports from 10 percent to 25 percent.
“We’re seeing a lot of comments from the respondents about evaluating whether to manufacture something in the U.S. or make it in Canada or make it in Mexico,” Timothy Fiore, chairman of the Institute for Supply Management’s manufacturing survey, said Wednesday, per Bloomberg News. “If the end market is Europe or China … you’re going to want to move it outside the U.S. at this point.”
Ned Hill, an Ohio State University professor who studies manufacturing, tells me he's hearing the same thing. “Companies I talk to are starting to compare their offshore production pricing to their North American production pricing… Their pricing departments are working overtime and exercising spreadsheets quite actively,” he says.
They have yet to make any decisions, pending more clarity about where the trade war is headed, Hill says. But for many, shifting production wouldn’t require major investments. He said the Trump administration may be “missing the Rubik’s cube that a modern, U.S.-headquartered global corporation plays with. The big change since 2000 is putting production platforms near major markets… They can ship into any market in the world from any of their other factories.”
The state of play suggest Harley-Davidson — which in June announced it would move some manufacturing abroad to duck retaliatory European tariffs, drawing a tirade from Trump — may be a harbinger of a wider trend. If more U.S. companies follow the motorcycle maker’s lead, the headlines alone would create a political migraine for a president who campaigned on promises to restore American manufacturing might.
more:
http://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2018/08/02/the-finance-202-trump-tariffs-could-drive-u-s-factories-overseas/5b61e33f1b326b0207955ea7/?utm_term=.d3ddcc80d2b7
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