US companies are 'staying put' in China, none plan to move manufacturing to US

This is a transcript, for the video found here:

Bullets:

The media report that American firms are abandoning China, and investing in manufacturing and supply chains elsewhere in Asia, or to friendlier countries like Mexico.

But most US firms instead have doubled down on their commitment to the Chinese market, and the surveys of executives in China never suggested a large exodus was likely.

Now that tariff rates have normalized at high levels even in countries once considered most friendly to the United States, there is little reason for companies to move supply chains out of China.

What's more, in recent surveys of firms operating in China, not a single company answered that they would move manufacturing to the US, even if tariffs over 100% were again enacted.

Report:

Good morning.

It’s easy to cherry-pick data and come up with conclusions that are not actually supported BY the data. This is a good example, and of why consumers of media are cynical, and why they should be. It’s from a survey conducted here, in China, released in January of this year. The headline is that a record share of American companies in China are accelerating plans to relocate manufacturing or sourcing, out of China. 30% of respondents in the survey by the American Chamber of Commerce report “having considered or started such diversification” last year, in 2024, and that was higher than the previous record high in 2022, of the companies who said so.

The survey was of 368 companies here in China. And if we only read the first few paragraphs, we understand that there is a massive exodus underway of US firms leaving China, and that it is accelerating. It’s even faster now than when Trump was president the first time.

But when we read further, in the same article, we get to this: Two thirds of US companies aren’t going anywhere. They could have put that up at the top, or this here—technology, industrial, and consumer businesses said that China’s domestic market is their best business opportunity for 2025. And that Services firms said that their biggest business was helping Chinese companies expand abroad. And that Michael Hart, the president of the American Chamber in China, concludes that the membership still sees China as an enormous, critical market for their companies.

Here's a report from last year, April 2024. This one is almost funny to read now. Headline: Many US companies are moving production to democratic nations; Beijing is furious. Their lead paragraph is that Foxconn, who builds everything that Apple puts their name and logo on, is opening a new plant in India. It’s “part of a broader trend of friendshoring”, whereby American businesses move toward “friendlier, more stable environments.”

The diplomatic situation between the US and China is great news for countries with friendlier ties to the United States, such as Mexico, India, and Japan. Mexico attracted $30 billion in foreign investment, much of that from US companies, who are looking to build in Mexico instead of countries in Asia.

In India, stable relations with the US plus a booming population is getting US companies to move there. 61% of 500 US executives “would choose India over China for manufacturing if India had the same service as China.” India doesn’t have that, not even close, but let’s put it in.

And “developments in Japan are equally revealing.” And what we’re seeing in Mexico, India, and Japan paint a clear picture: American companies are not entirely abandoning China, but they are looking hard at everywhere else.

Here’s how all that is turning out, just one year later. In Mexico, all those car companies setting up there got hit with a 25% tariff, now it’s 15%. The tariffs on those cars and parts were zero, then 25%, then 15%. At least for now. Tomorrow who knows.

India got hit with a 25% tariff, and has a couple of weeks left before that tariff goes to 50%. India remember has “stable relations with the US”, now they’re closer to Russia than ever. Nobody saw Japan’s high tariffs tariffs coming: the baseline tariff now is 15%, and in order to get that the Japanese need to invest over half a trillion dollars, directed by the United States, whatever that means.

So it’s now summer 2025, and nobody is going anywhere. Bloomberg: US firms in China will stay put despite tariffs, or perhaps because of them, now that they know they’ll be hit no matter where they go. Even if tariffs go back up, 41% won’t change their plans on anything, and 21% would shift more production and sales into China. That’s 62%. Companies large and small. And no respondents—zero, said that they would move their production to the United States, even if tariffs go back up to 145%.

The “plan to bring manufacturing back to the US is facing challenges”, in the understatement of the year. American companies are localizing in China, no plans to leave. There has been no “mass exodus” of American companies out of China, and 70% of companies said they are either maintaining or increasing their activities here.

The Wall Street Journal included a report that details the concerns of these companies that operate in the US and China, and the risks they face, and conclude that the size of China’s market, supply chains and logistics, and skilled workforce mean the companies are staying.

The headlines were saying that US companies in China said they were leaving. But the companies never really did say that. It’s true that they were considering moving some supply chains around—company managements are supposed to do that, to always explore new opportunities for new markets in other countries, and doing the due diligence to see what works, for example to build things in India for Indian consumers. But for anything going to the US, the math doesn’t work. Everyone is better off doing nothing at all.

Resources and links:

CNBC, India, Russia vow to deepen trade ties, defying Trump’s tariff threats over oil

https://www.cnbc.com/2025/08/22/india-defies-us-tariffs-to-boost-russia-trade-putin-modi-trump.html

BBC, India has 20 days to avoid 50% Trump tariffs - what are its options?

https://www.bbc.com/news/articles/c1w83j35jjjo

Trump announces 25% tariff on India and unspecified penalties for buying Russian oil

https://apnews.com/article/trump-tariffs-russia-india-9e388a55583e7007149819c52f0fd71b

US Lowers Auto Tariff on Mexican Cars to 15% from 25%

https://mexicobusiness.news/automotive/news/us-lowers-auto-tariff-mexican-cars-15-25

South China Morning Post, US Firms in China Will Stay Put Despite Tariffs, AmCham Says

https://www.scmp.com/economy/global-economy/article/3313423/no-polled-us-firms-china-shifting-production-back-us-amcham-survey-finds

Bloomberg, US Firms in China stay put, despite high tariffs

https://www.bloomberg.com/news/articles/2025-06-06/us-firms-in-china-will-stay-put-despite-tariffs-amcham-says

American Companies Are Rethinking China

https://rdi.org/articles/american-companies-are-rethinking-china/

Wall Street Journal, Many U.S. Companies Plan to Keep China Ties, Survey Finds

https://www.wsj.com/world/china/many-u-s-companies-plan-to-keep-china-ties-survey-finds-906481c9

CNBC, Share of U.S. companies in China looking to relocate hits a record high, survey finds

https://www.cnbc.com/2025/01/23/us-companies-in-china-looking-to-relocate-at-a-record-high-survey-finds.html