US Reliance on China Drops Amid Trump Tariffs, Disruptive Policies, Ethical Concerns

American dependence on imports from China has significantly diminished in recent years. Companies are scrambling to redirect their supply chains elsewhere to avoid unpredictable policy changes by the communist regime, tariffs imposed on China in 2018, and backlash over human rights violations. February imports from China came in below $31 billion, the lowest since 2006, adjusted for inflation and excluding February and March 2020 when movement of goods from China plummeted due to the COVID-19 pandemic restrictions, based on Census Bureau and Bureau of Labor Statistics data. In particular, clothes and electronics imports, where China used to reign, have shifted. Computer and electronics imports in January and February dropped by about 27 percent compared to the same months in 2018. Clothing imports dropped nearly 42 percent in the same period, according to Department of Commerce data. China may in fact lose the position of America’s largest trading counterpart. In February, the United States imported more from Mexico than from China—a situation unseen for decades, save for the two months at the onset of the pandemic. China has been bleeding clothing industry market share for at least a decade, with the decline accelerating dramatically in 2018, after the Trump administration imposed tariffs on myriads of Chinese goods, as noted by the United States Fashion Industry Association (USFIA) in March as it released its Sourcing Trends and Outlook report. The tariffs have yielded over $176 billion, according to customs data. “While China remains the major supplier to the U.S. market, they are no longer a dominant supplier,” USFIA commented on the 2022 data. The trend appears to be yet more prominent this year. America has imported close to $4 billion worth of clothes from Vietnam and Bangladesh, but less than $2.8 billion from China, in over the period of January and February, accounting for less than 20 percent import market share. In the same period, some $20 billion in computers and electronics came from China, while over $24 billion came from Mexico, Taiwan, and Vietnam. That leaves China with less than 29 percent market share. Aside from the tariffs, China exasperated retailers last year with repeated extreme COVID-19 lockdowns. The disease itself caused further disruptions. “Expect myriad delays and order cancellations this year if your suppliers have suppliers in China,” warned Everstream Analytics, German supply chain consultancy, in its 2023 forecast (pdf). It assigned the risk at 90 percent probability. “Assurances from your Tier 1 suppliers that they don’t do business with China isn’t sufficient protection because those suppliers probably don’t have visibility through their entire supply network,” the report said. “But they will feel the impact at some point in 2023.” The report also assigned a 75 percent “Risk Score” to the eventuality that companies will be confronted over slave labor violations. “Media investigators, NGOs, and other research teams investigating forced labor violations spurred the passage of the Uyghur Forced Labor Protection Act (UFLPA),” it noted. “Investigators have uncovered links between several high-profile brand names and their sub-tier suppliers that utilized forced labor in Xinjiang, China. Your company could be in the next headlines, especially if it’s in the electronics or retail industry.” Slave labor is sanctioned by the regime in China. Though the country’s vast network of “reeducation-though-labor” camps was officially closed down years ago, the practice continues in various other detention facilities. The use of this form of “reeducation” on the Uyghur minority in Xinjiang has garnered significant international attention, but it’s been widely used against the whole populace and prisoners of conscience in particular, including Tibetan Buddhists, democracy activists, underground Christians, and practitioners of Falun Gong. Under UFLPA, 31 companies have been banned from U.S. imports for using slave labor in Xinjiang, but Everstream found at least 177 more. “Expect those to surface in media coverage in the coming year,” the report said. Microchip manufacturing is in the process of shifting away from China, but the process will take time, it said. “Many chip-making companies decided to move out of China during the height of the COVID-19 pandemic and the chip shortages of 2020-2021. Because it takes about three years to build up a semiconductor chip plant, diversifying away from China will become evident in 2024 as those new plants come online.”

US Reliance on China Drops Amid Trump Tariffs, Disruptive Policies, Ethical Concerns

American dependence on imports from China has significantly diminished in recent years. Companies are scrambling to redirect their supply chains elsewhere to avoid unpredictable policy changes by the communist regime, tariffs imposed on China in 2018, and backlash over human rights violations.

February imports from China came in below $31 billion, the lowest since 2006, adjusted for inflation and excluding February and March 2020 when movement of goods from China plummeted due to the COVID-19 pandemic restrictions, based on Census Bureau and Bureau of Labor Statistics data.

In particular, clothes and electronics imports, where China used to reign, have shifted.

Computer and electronics imports in January and February dropped by about 27 percent compared to the same months in 2018. Clothing imports dropped nearly 42 percent in the same period, according to Department of Commerce data.

China may in fact lose the position of America’s largest trading counterpart. In February, the United States imported more from Mexico than from China—a situation unseen for decades, save for the two months at the onset of the pandemic.

China has been bleeding clothing industry market share for at least a decade, with the decline accelerating dramatically in 2018, after the Trump administration imposed tariffs on myriads of Chinese goods, as noted by the United States Fashion Industry Association (USFIA) in March as it released its Sourcing Trends and Outlook report.

The tariffs have yielded over $176 billion, according to customs data.

“While China remains the major supplier to the U.S. market, they are no longer a dominant supplier,” USFIA commented on the 2022 data.

The trend appears to be yet more prominent this year. America has imported close to $4 billion worth of clothes from Vietnam and Bangladesh, but less than $2.8 billion from China, in over the period of January and February, accounting for less than 20 percent import market share.

In the same period, some $20 billion in computers and electronics came from China, while over $24 billion came from Mexico, Taiwan, and Vietnam. That leaves China with less than 29 percent market share.

Aside from the tariffs, China exasperated retailers last year with repeated extreme COVID-19 lockdowns. The disease itself caused further disruptions.

“Expect myriad delays and order cancellations this year if your suppliers have suppliers in China,” warned Everstream Analytics, German supply chain consultancy, in its 2023 forecast (pdf).

It assigned the risk at 90 percent probability.

“Assurances from your Tier 1 suppliers that they don’t do business with China isn’t sufficient protection because those suppliers probably don’t have visibility through their entire supply network,” the report said.

“But they will feel the impact at some point in 2023.”

The report also assigned a 75 percent “Risk Score” to the eventuality that companies will be confronted over slave labor violations.

“Media investigators, NGOs, and other research teams investigating forced labor violations spurred the passage of the Uyghur Forced Labor Protection Act (UFLPA),” it noted.

“Investigators have uncovered links between several high-profile brand names and their sub-tier suppliers that utilized forced labor in Xinjiang, China. Your company could be in the next headlines, especially if it’s in the electronics or retail industry.”

Slave labor is sanctioned by the regime in China. Though the country’s vast network of “reeducation-though-labor” camps was officially closed down years ago, the practice continues in various other detention facilities. The use of this form of “reeducation” on the Uyghur minority in Xinjiang has garnered significant international attention, but it’s been widely used against the whole populace and prisoners of conscience in particular, including Tibetan Buddhists, democracy activists, underground Christians, and practitioners of Falun Gong.

Under UFLPA, 31 companies have been banned from U.S. imports for using slave labor in Xinjiang, but Everstream found at least 177 more.

“Expect those to surface in media coverage in the coming year,” the report said.

Microchip manufacturing is in the process of shifting away from China, but the process will take time, it said.

“Many chip-making companies decided to move out of China during the height of the COVID-19 pandemic and the chip shortages of 2020-2021. Because it takes about three years to build up a semiconductor chip plant, diversifying away from China will become evident in 2024 as those new plants come online.”