Trump's call for companies to leave China is easier said than done
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President Trump may be serious about trying to push U.S. companies out of China, but businesses have already seen that getting out is easier said than done.
Driving the news: In renewing his call for companies to leave China in recent tweets, Trump cited the International Emergency Economic Powers Act of 1977, a law that was passed to allow a president to isolate rogue or criminal regimes.
- It has been used mainly to combat state-sponsored terrorists, drug traffickers and "pariah states like Iran, Syria and North Korea," the New York Times notes.
What's happening: U.S. companies have been trying to move out of China to avoid the tariffs, but China has simply cornered too many markets. Firms have been setting up shop in China for 3 decades and megacompanies like Boeing, Apple, Intel and Nvidia generate major chunks of their revenue there.
- China also has developed a pipeline of engineers, data scientists and other specialists that is unrivaled even by developed countries like the U.S. and Western Europe.
- Combined with its size and growing middle class, it's not a market that companies can just leave.
Be smart: Some manufacturers have tried moving to Vietnam but have been stymied by a lack of specialized supply chains and Vietnam's tightening labor market, WSJ's Niharika Mandhana writes.
- “You can’t just shift your business to Vietnam and expect to find what you’re looking for,” Wing Xu, operations director for Omnidex Group, which helps make products for U.S-based McLanahan Corp., told Mandhana.
