Global Trade Flows Are Changing: Here is One Example
Been shopping in brick-and-mortar stores lately? Then you may have noticed a bit more variety in where things are sourced: “Made in China” product labels are no longer as ubiquitous. What’s going on? Higher US tariffs on many Chinese imports and ongoing trade tensions between the US and China are having an impact on where goods are produced before being shipped to the US, the world’s largest consumer market.
In our Q3 2019 Economic Outlook, LNWM analysts pointed out that Chinese companies have been actively shifting their logistics chains from China to Vietnam to get around the US tariffs, and this has contributed to the surge in US imports from Vietnam so far in 2019. As the chart shows, the jump in US imports from Vietnam has been dramatic, while US imports from China have actually dropped in 2019. Imports from South Korea and Taiwan (which have higher production costs) are also different in 2019 but only slightly. Meanwhile, China is importing significantly less from the US so far in 2019.
To find out more about what US-China trade tensions may mean for world markets, read our Q3 2019 Economic Outlook.