The China-Global South Podcast The Fate of China's Global Supply Chains in the New Tariff Era
Apr 9, 2025
Agatha Kratz, a partner at Rhodium Group specializing in corporate advisory, and Juliana Bouchot, a senior analyst focused on supply chain policy, dive into the complexities of China’s role in global supply chains. They discuss escalating U.S.-China trade tensions and the potential impacts of new tariffs on inflation and consumers. The conversation reveals the challenges major companies, like Apple, face in reshoring their manufacturing. They also explore the prospects for emerging markets absorbing China’s manufacturing output amidst these shifts.
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China's Supply Chain Dominance and Shifts
- China remains the dominant global manufacturing power while Southeast Asia grows as an emerging manufacturing hub.
- Vietnamese supply chains are evolving beyond simple transshipment to deeper local production capabilities.
Tariffs May Freeze Supply Chain Diversification
- Broad tariffs on China and its alternative supply hubs may freeze diversification and increase inflation instead of reducing it.
- High tariffs across many countries reduce the incentive to shift supply chains away from China quickly.
Apparel Sector Shows China's Resilience
- Despite diversification, China still dominates apparel exports and input production globally.
- If tariff levels on alternative hubs equal those on China, supply chains are likely to remain in China due to efficiency and scale.