The Wall Street was rattled as President Trump Demanded American firms to move out of China and look for an alternative. But a lot of firms have already moved out and a lot other are on the verge to leaving the nation as the trade war is intensifying every day. According to the earning reports from a variety of firms, CEO’s have signified that they are diversifying their supply chain to tackle the scenario.
On 23rd August, Trump tweeted, asking American firms to immediately look for alternatives other than China. He also urged them to start the production in U.S instead. While doing so he cited the IEEPA act 1977. The International Emergency Economic Power Act was passed to tackle, unusual and extraordinary threat to the economy, national security and foreign policies. This shook the market and stock prizes saw a session low as investors panicked.
American firms have already started planning the course of action to diversify their supply and manufacturing sources, despite the heat of trade war but this latest announcement has put pressure over the rest of the firms that will face issues in finding alternatives in a lot less time.
Technology giants like HP, Apple, and Dell are among the most affected as China is responsible for producing over 25% of the world’s electronic products. These companies have started shifting by giving around 30% of the production to neighboring countries. Among all this turmoil, the ‘Made in China’ tag is losing its luster as the factory activities in China are on a decline due global as well as local demand being low.
Retail industry will also be affected heavily as it is not easy for them to just abandon their assets so quickly and same is for the food-chains. Companies are withdrawing from China although only 3% are going to be in America as the other companies are looking for possibilities in India, Vietnam and other countries in Asia as they are showing promise for good trade.