Trump presses U.S. companies to close China operations
(Adds U.S. Chamber of Commerce reaction, stock prices)
By David Shepardson and Andrea Shalal
WASHINGTON, Aug 23 (Reuters) - President Donald Trump said
on Friday he was ordering U.S. companies to look at ways to
close their operations in China and make more of their products
in the United States instead, sending U.S. markets down sharply
in a new rhetorical strike at Beijing as trade tensions mounted.
Trump cannot legally compel U.S. companies to abandon China
immediately. He gave no detail on how he might proceed with any
such order, although he said he would be offering a response
later on Friday to tariffs on $75 billion in American products
announced by China earlier in the day.
The U.S. dollar rose sharply against the Chinese yuan, U.S.
stock markets fell 2% and oil prices dropped on Trump's latest
salvo against China. Apple Inc fell 4%, while General Motors and
Intel Corp each fell 3%.
"Our great American companies are hereby ordered to
immediately start looking for an alternative to China, including
bringing your companies HOME and making your products in the
USA," Trump wrote on Twitter. "We don't need China and, frankly,
would be far better off without them."
The U.S. Chamber of Commerce rebuffed Trump's suggestion and
urged China and the United States to quickly reach a deal in the
long-running trade issue. "While we share the president’s
frustration, we believe that continued, constructive engagement
is the right way forward," the group said.
Experts said tax policy changes and sanctions could be used
to restrict or reduce U.S. business activity in China, but it
would take years to disentangle the world’s two largest
economies. The consequences of a complete break to the world
economy would be severe, they said.
China, for instance, holds $1.11 trillion in U.S. Treasury
For many products sold in the United States, there are few
alternatives to Chinese production, and shifting production for
major goods produced there could take years and be expensive.
American companies could also sue the U.S. government in
response to any order to shutter plants in China. The most
effective option for Trump would be to restrict federal
procurement from any companies that do business in China.
That would hit companies like Boeing Co, Apple and
General Motors, which are both big U.S. contractors and
have large business interests in China.
Bill Reinsch, a former senior Commerce Department official,
said Trump had limited options to force U.S. companies to quit
China, and it would make little economic sense.
"We can’t be a market economy and do that," Reinsch said.
"No one’s going to pay attention to it anyway. Companies do what
they’re going to do."
Many U.S. companies have already begun moving some
operations out of China due to rising labor costs. But others,
including General Motors, have large plants there to supply the
Chinese market. They would resist any pressure to close their
facility there, given the size and importance of the Chinese
market, Reinsch said.
Last week, Trump backed off his Sept. 1 deadline for 10%
tariffs on remaining Chinese imports, delaying duties on
cellphones, laptops and other consumer goods.
The U.S. Trade Representative's Office delayed tariffs on
more than half the $300 billion in Chinese-made goods telling
companies the delay covered product categories where China
supplies more than 75 percent of total U.S. imports.
(Reporting by Makini Brice, David Shepardson and Andrea Shalal;
editing by Tim Ahmann, Jonathan Oatis and Chizu Nomiyama)
First Published: 2019-08-23 16:56:00
Updated 2019-08-23 19:37:54
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