The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China as it weighs new tariffs to punish Beijing for its handling of the COVID-19 outbreak, according to U.S. officials.
President Trump has long pledged to bring manufacturing back from overseas.
Now, economic destruction and the massive U.S. COVID-19 death toll are driving a government-wide push to move U.S. production and supply chain dependency away from China, even if it remains overseas elsewhere, current and former senior U.S. administration officials said.
“We’ve been working on (reducing the reliance of our supply chains in China) over the last few years but we are now turbo-charging that initiative,” Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the U.S. State Department told Reuters.
The U.S. Commerce Department, State and other agencies are looking for ways to push companies to move both sourcing and manufacturing out of China. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, the officials said.
“There is a whole of government push on this,” said one. Agencies are probing which manufacturing should be deemed “essential” and how to produce these goods outside of China.
Trump’s China policy has been defined by behind-the-scenes tussles between pro-trade advisers and China hawks; now the latter say their time has come.
“This moment is a perfect storm; the pandemic has crystallized all the worries that people have had about doing business with China,” said another senior U.S. official.
“All the money that people think they made by making deals with China before, now they’ve been eclipsed many fold by the economic damage” from the pandemic, the official said.
Trump has said repeatedly that he could put new tariffs on top of the up to 25 percent tax on $370 billion in Chinese goods currently in place.
U.S. companies, which pay the tariffs, are already groaning under the existing ones, especially now, as sales plummet.
But that does not mean Trump will balk at new ones, officials say. Other ways to punish China may include sanctions on officials or companies, and closer relations with Taiwan, the self-governing island China considers a province.