The high tariffs on goods imported into the US from China has some companies questioning whether or not they should start shifting their supply chains. As Rhodium Group senior analyst Lauren Dudley explains in the video above, there could be one thing that could become a deciding factor for some businesses.
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Lauren, I’m curious what do you think the odds are ultimately of a of a grand bargain being reached between Trump and G. and and what do you think such a grand bargain could actually look like?
I think uh some sort of grand bargain is possible. Right now 145% tariffs on China for most sectors is just it's it's a trade embargo. It's it's not sustainable. Um so I think most likely what we're going to see is that the tariff rates are going to come down, but they're most likely going to remain elevated. And so the most important thing to watch and what's going to matter for global supply chains is the difference, the difference between tariffs imposed on China versus other countries like Vietnam or India. Um if there's not much of a difference, we may not see supply chains shift that much. Uh, but if uh tariffs on China remain elevated compared to these other countries, uh it will create enough of an of an incentive uh for companies to move their supply chains out of China.
Lauren, we've been focused on um on the semiconductor supply chains in particular, but also the sort of export bans that we've seen from the US imposed on the ability of companies like Nvidia to sell into China. We then got a report today of course that Huawei was going to be developing some chips that would compete with the chips that had been banned for sale in China. So, as we watch that development, the sort of homegrown technology industry in China, does it end up giving that industry a boost or does it end up holding it back?
These tariffs um and the trade policy uh the Trump administration is uh pushing forward. Um, it could incentivize China to uh double down on its self-sufficiency uh goals as seen with Huawei and its development of its homegrown chips. Um, I think these tariffs uh the US has imposed has uh really made clear to China that uh the US is committed to doing more restrictive trade measures um and that the the trade relationship is going to worsen. Um so I think that China will double down on developing these uh homegrown technologies on the sort of self-sufficiency push uh that we've seen China uh work on for the past uh decade or so.
