What Comes After China?

Through tariff incentives and manufacturing subsidies, U.S. leadership is trying to untether U.S. trading relationships with China.

Consumer electronics especially reflect the initial results:

After China

Detailing an “after China” future, a Lazard Geopolitical Advisory suggests a “China-plus-many” policy because there is no “next China.” Consequently, complementing their economic relationship with China, companies will discover other nations’ manufacturing limitations. While the goal is labor quality and quantity, it is tough to find both. In Poland, the labor supply has the skills but not the numbers. Although Poland is equipped with a better infrastructure than China, it has water shortages and an aging population. By contrast, India and Vietnam have the skill level constraints. And Mexico has the location.

Documenting the potential of U.S. trading partners, the Lazard report charts six nations’ (China, India, Vietnam, Mexico, Poland, Thailand) key attributes. Through thumbnail summaries, they start with geopolitics and industrial policy. As you can see below, then, they give us a snapshot of the infrastructure, financial conditions, and the local supply ecosystem.

I copied the first two lines of the chart. (The four other nations follow in the Lazard report.):

Still, China has a “competitive edge.”

Our Bottom Line: U.S. Trading Relationships

Cars and petroleum dominate U.S. international trade as does China:

Imports

Perhaps though, it all takes us to foreign direct investment (FDI). The future location of manufacturing certainly relates to where companies plant their roots. Perfectly expressed at the end of the Lazard report, there is no one-size-fits all. Consequently, each firm will assess the costs and benefits.

My sources and more: Researching yesterday’s post, I discovered so much insight in this Lazard report on “The Geopolitics of Supply Chains.”  From there, the Observatory of Economy Complexity (OEC) had even more data.