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Explainer: What tools could Trump use to get U.S. firms to quit China?


Added 08-23-19 09:04:02pm EST - “Hours after China announced retaliatory tariffs on U.S. goods on Friday, President Donald Trump ordered U.S. companies to "start looking for an alternative to China, including bringing your companies HOME and making your products…” - Finance.yahoo.com

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Posted By TheNewsCommenter: From Finance.yahoo.com: “Explainer: What tools could Trump use to get U.S. firms to quit China?”. Below is an excerpt from the article.

WASHINGTON (Reuters) - Hours after China announced retaliatory tariffs on U.S. goods on Friday, President Donald Trump ordered U.S. companies to "start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.".

The stakes are high: U.S. companies invested a total of $256 billion in China between 1990 and 2017, compared with $140 billion Chinese companies have invested in the United States, according to estimates by the Rhodium Group research institute.

Some U.S. companies had been shifting operations out of China even before the tit-for-tat tariff trade war began more than a year ago. But winding down operations and shifting production out of China completely would take time. Further, many U.S. companies such as those in the aerospace, services and retail sectors would be sure to resist pressure to leave a market that is not only huge but growing.

Unlike China, the United States does not have a centrally planned economy. So what legal action can the president take to compel American companies to do his bidding?

Trump could do more of what he's already doing, that is hiking tariffs to squeeze company profits enough for them to make it no longer worth their while to operate out of China.

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