Repeat After Me: Trade Relations Between the United States and China Will Only Get Worse

Home | China Law Blog | Repeat After Me: Trade Relations Between the United States and China Will Only Get Worse On October 2, I tweeted the following and then pinned this tweet to the top of my Twitter page: 2.5 years ago, we predicted that China would become increasingly isolated. It has been a straight track towards China isolation ever since then. This tweet linked to a our May 8, 2019 post, entitled, The US-China Cold War Starts Now: What You Must do to Prepare. This post, in turn, linked back to many of our previous posts in which we resolutely predicted US-China relations were going to go into a long term tailspin and warned against believing otherwise. The first heading to this post was "1. Worsening US-China Relations Should Be No Surprise and in that section we stated the following: Since the very beginning of US-China trade negotiations, we have been unequivocally negative on the likelihood of a deal and we have taken huge amounts of heat for that, via hate e-mail, online, and even from some of our own clients who accuse us of being too cynical or too negative about China. Our response to all of this has been consistent. NOW is the time for foreign companies (especially those that sell their products to the United States) to work hard on reducing their China footprint. We first publicly sounded this warning in October, 2018, in China, the United States and the New Normal, though we had been warning our own clients about this for months. This “New Normal” post was an attempt to get in the face of those who had been sending our lawyers hate mail because we had in a September 2018 post predicted manufacturing orders from China were declining and would continue to decline: I got a badly written and angry email yesterday in response to my post, On the Impact of China Tariffs: Is This a Dead Cat Bounce? In my post I predicted a decline in manufacturing orders from China, starting in the next few months. The email accused me of “hating China” and wanting “to impede its peaceful” rise and of being “jealous of its progress.” All this because we have lately been writing how so many of our law firm’s own clients and so many others are leaving China, or looking to leave China. We have been getting quite a lot of these sorts of emails lately In April of this year, the Wall Street Journal quoted me in a cover story, Trade Deal Alone Won’t Fix Strained U.S.-China Business Relations, saying the following: “There is no way any deal between China and the U.S. will cause everyone on both sides to say, ‘We were just kidding,’” said Dan Harris, managing partner at Harris Sliwoski, a law firm that specializes in investment with China. “The tariffs and the arrests and the threats and the heightened risk have impacted companies and that will not go away.” Then on May 4, 2019, (one day before President Trump’s May 5 tariff tweet that changed everything) I wrote The US-China Trade War: Winter is Coming on how no matter what happens in the US-China trade war, things would NOT revert back to the way they had been: The acceleration of this decoupling trend has been unleashed and no trade deal is going to end that. Why would it? The tariffs may disappear or be reduced but the tension is going to remain and my law firm’s China lawyers and international trade lawyers are seeing evidence of this everywhere, both in how the US treats Chinese companies and how China treats US companies. The US is cracking down hard on China deals with US companies on national security grounds. And China is doing what it can to stop its own companies from dealing with the United States. We then listed out our previous blog posts on what foreign companies should do in light of the tariffs imposed against China — much of which information is relevant for the tariffs that will go into effect at 12:01 a.m. THIS Friday: China/U.S. Tariffs and How to Fight Back On the Impact of China Tariffs: Is This a Dead Cat Bounce? U.S. Tariffs Against Vaping Imports from China: Don’t Let Your Industry go up in Smoke China, Wine, and Tariffs And so began our steady stream of posts exhorting companies to look more closely at countries other than China. That "Cold War" post concluded by saying: Winter is upon us. And as much as it pains me to say this, the US-China cold war starts now. And as is so often the case whenever we bear news that many simply do not want to hear, we got our share of hate emails, most of which made it seem as though we were cheering this on and our writing about it would make it more likely to occur. If you have not seen today's news, you may be wondering why I am bringing up this old news again now. If you have read today's news, you know. This New York Times lede and subheading says it all: U.S. Signals Little Thaw in Trade Relations With China: The Biden administration said it would not immediately remove the Trump administration’s tariffs and would require that Beijing uphold its trade commitments. In other words, if you still believed that US-China trade relations would improve under Biden, today is the day that you should once and for all extinguish that belief and if you are getting your products from China, start looking for alternatives. I know many have seen this news because I woke up to even more emails than usual from companies looking for help in moving their manufacturing out of China. And this is really why I am writing this post. I want to put up here our best posts on what it takes to move your manufacturing out of China (see below) and also to extend a one time 10% fee discount to any new or existing clients who retain us before the end of October to assist them in moving their manufacturing out of China OR to help them with their legal needs related to manufacturing in any country other than China. This includes our Mexico lawyers and all of our foreign business specialists, including those for Thailand and for Vietnam. I am doing this because I believe that the world will benefit from manufacturing leaving China for pretty much anywhere else. There, I said it. Oh, and in answer to the inevitable questions, you should expect EU-China relations to proceed on a similar track, just maybe 4-8 months behind. If you are contemplating moving your manufacturing out of China (and who isn't these days?) I urge you to read the below posts most relevant to your situation: 1. Moving your manufacturing out of China. How to Move Your Manufacturing Out of China Safely Moving Your Manufacturing Out of China: The Initial Decisions Mid-sized American Companies are Already Moving Away from China and You Should Too The US-China Future: Meet Vietnam, Thailand, Mexico, Malaysia, India, Indonesia,Taiwan, Turkey, and the Philippines Moving Manufacturing from China: Where you Gonna Run? 2. Mexico "Mexico is the New China" and Manufacturers are Moving There Moving Your Manufacturing From China: Look South (Again) to Mexico and Puerto Rico Shelter Manufacturing in Mexico: Back by Popular Demand Made in Mexico and the U.S.-China Trade War 3. Thailand and Vietnam Moving Your Supply Chain From China to Southeast Asia/South Asia: The Three Big Issues Manufacturing Outside China: It's Thailand's Time Manufacturing Outside China: It's Thailand's Time, Part 2 What are you going to do? Check Out Our China Law Services Share Twitter Facebook LinkedIn E-mail Comment Dan Harris Dan Harris is a founding member of Harris Sliwoski, an international law firm where he mostly represents companies doing business in emerging market countries. Most of his time is spent helping American and European companies navigate foreign countries by working with the international lawyers at his firm in setting up companies overseas (WFOEs, Subsidiaries, Rep Offices and Joint Ventures), drafting international contracts, protecting IP, and overseeing M&A transactions. In addition, Dan writes and speaks extensively on international law, with a focus on protecting foreign businesses in their overseas operations. He is also a prolific and widely-followed blogger, writing as the co-author of the award-winning China Law Blog. 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