Companies Will Continue to Move Supply Lines from China After Election, Experts Say

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With the 2020 presidential election less than two weeks away, the economy and manufacturing have been important topics for both candidates. However, despite the difference they may have, experts like PwC Chairman Tim Ryan believes that one thing will remain the same: the shifting of supply lines out from China.

Ryan noted that while it was President Trump’s trade war with China that drew attention to potential supply chain risks and movement, the Covid-19 pandemic really shined a light on the situation. When the pandemic broke out in China, many companies saw their production capabilities and supply chains severely crippled as a result. This left them even less prepared for when the virus spread outwards towards places like Europe and North America, as they were unable to adequately adjust or prepare in advance.

According to Ryan, “Covid really put a spotlight … on supply chain risk, and one of the things that we’re seeing is supply chain derisking has moved all the way up to the boardroom level, as we see now concentrations in our supply chains that was maybe not evidenced before.” Those expected to benefit from the supply relocation would include Mexico, Southeast Asia, and the United States.

In a September survey of 578 company executives by PwC, 46% “strongly agreed” that the government needed to do more to boost American manufacturing, especially of needed medical supplies. At the very least, the raising of tariffs on China by the Trump administration has started to cause companies to search for other countries to house their manufacturing in, as the president has suggested.

30% of those surveyed also felt that relations with China will continue to be tense no matter who is elected. This mindset may lead to companies to take the extra precaution of moving production out once others begin to do so. However, Ryan notes that the U.S-China relationship will still be important, but it’s yet to be seen what the moving of industry out of the country will do to it.