The Covid-19 pandemic is straining the already-testy relationship between the U.S. and China. President Trump recently threatened new tariffs on China as part of the U.S. response to the worldwide outbreak of the virus. The president told reporters that his concerns over China's role in the origins and initial spread of the coronavirus outweigh the importance of any new trade deal with Beijing.
At the same time the president threatens new tariffs, American companies are looking to move operations out of China and back stateside in an effort to reduce our reliance on China for essential products. "China's trade competition with the United States, and then this Covid-19 crisis...both of those have really exposed the difficulties of having supply chains that are overly dependent on particular areas," says Rodger Baker, strategic analyst and China expert at Stratfor, a RANE company.
Baker understands U.S. companies and the president being eager to shift production away from China and come back home, but he warns that could be an expensive and complicated process. "Packing up and changing your entire supply chain is not an easy thing...you may have to rebuild facilities, you may have to retrain workers," he says. "To change overall trade and manufacturing patterns in the United States is going to take a very long time, and therefore the tariffs in the near-term probably will cause (economic) damage."
Regardless of how it all plays out, we are likely to see months and perhaps years of increased tensions between the two nations. "With the U.S. talking about extending tariffs, threatening to overturn the trade deal, and even continued and expanded activity in the maritime frontiers of China, we see that this is a pattern that is going to continue beyond Covid-19," says Baker.