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The manufacturing re-shoring trend from China to the US is something I never thought I’d see happen. But what started as a trickle, has turned into a river. The sheer amount of companies announcing withdrawal from China and plans to build plants in the US is just crazy.

The upshot is, this is going to really change the nature of America’s trade balance with the world, which is going to have major geopolitical repercussions in the years to come.

The downshot, is this potentially increases the risk of kinetic conflict between China and the US as the decreasing economic interdependence also loses its moderating influence.

davies 2y ago

I suspect there’ll be a lot more near-shoring too with the likes of Mexico and other Central and South American countries.

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Discussion

Mike Brock 2y ago

Agree. And that’s already happening.

davies 2y ago

I think Zeihan lays it out well (despite his views on bitcoin)

Mike Brock 2y ago

Also, people act like America has no manufacturing capacity to speak of. It seems like a poorly known fact, that America remains a strong #2 behind China in terms of the volume of manufactured goods. Given China’s demographic challenges, and the increasingly risky investment environment there, with Xi going down the Maoist route, it’s not even impossible to think of a future where America regains is crown as #1. I think America would have to liberalize immigration, among other things, to support that. But it’s no longer an impossible future.

heinz57 2y ago

Tell the people who believe that to take a flight to Vegas this week for ConExpo and talk to the exhibitors. Unbelievable amount being produced domestically.

davies 2y ago

I don't disagree with any of that. China is uninvestable now given the last few years. Too risky and there are a lot of cracks in the China model. I remain bullish on the US.