For years now, China has been the world’s leading manufacturer. In many ways, China has become a global factory, producing a huge array of products that are then shipped to markets across the world. This has allowed China to build up a vast infrastructure friendly to manufacturing.
Now, however, multiple companies are considering a move to other countries, including nearby Vietnam. For example, Nintendo, which manufacturers the wildly popular Nintendo Switch, is contemplating a move from China to manufacture Switch’s destined for the U.S. market. Doing so would allow Nintendo to skirt tariffs.
Meanwhile, Google is planning to shift more production to Taiwan. Google would manufacture its Nest thermostats and server hardware in Taiwan. Taiwanese manufacturer Foxconn also notes that it has enough capacity outside of China to manufacture enough iPhones bound for the United States.
In the long run, if enough manufacturers leave China, it could undermine their status as the world’s leading destination. Even before the tariffs, rising costs in China had many companies looking to Vietnam and elsewhere to relocate manufacturing operations.
China has generally been able to leverage its superior infrastructure and industry support to keep production local. However, tariffs could wipe out those advantages as costs rise and the American market becomes harder to access.
Still, most of the production probably won’t be coming back to the United States. Instead, production will likely be relocated to Mexico, Vietnam, and other low-cost countries. This demonstrates just how difficult it is to support manufacturing in the United States.
