The trade war between China and the United States, which is now nearly one year old, has started to bring about the changes in industrial world which it had threatened to do during its onset. Owing to the massive tariff rates levied by the US government, tech giants like Google and Nintendo are looking to move their production units out of China to any south eastern country, despite the plethora of skilled labour and expertise China has on offer.
Google is expected to move the production of server hardware and Nest thermostats out of China impacting its massive presence in Taiwan. They’re not the only ones as Nintendo too plans to move the production for Nintendo Switch out of China. Companies are concerned with the higher tariffs being levied by the US government and find no other option but to move out of China at the earliest. The entire episode began with Foxconn, the company that manufactures most of the parts of iPhone, stating that it had enough resources to build all United States bound iPhones outside of China if needed. While Apple did not state that they were planning to move the production out of China, Foxxcon’s comments did trigger a thought of doing so in many tech giants.
Though the implications of companies moving out of China might sound bad for China alone, but the long term consequences of trade war are going to affect the American market as well. As has been seen recently, all of the American stock exchange markets registered a downfall as chip-makers suffered severely during the early trading window. Though analysts are urging investors to stay calm, even they know tackling the consequences won’t be that easy any more. Investments in American markets are going to suffer too if the trade war continues to move forward in the same manner.
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