Derek Scissors:
Absolutely.
The Chinese are very good at this, and they got a practice run in the first Trump term with much lower tariffs. Their companies are nimble. They’re used to foreign investment. There’s large-scale Chinese foreign investment overseas. They’re going to try, for sure, to move production elsewhere.
Now, if the U.S. enforces its trade policies, that won’t work. The U.S. has never enforced trade policies at a scale we’re talking about before. This is another thing that President Trump has done that no president has done, except we haven’t actually pulled it off yet.
So China is going to try to move production and shift trade through other countries. We have a response, but it’s going to be a challenging response. If we do enforce our trade laws against China, that opens the door for countries like Indonesia to produce their own goods, and, of course, also for production in the U.S.
But this is going to take some months to shake out, assuming there’s no U.S.-China deal.