Trump and Biden both vow to reduce reliance on China, but methods will be ‘night and day’

Trump and Biden both vow to reduce reliance on China, but methods will be ‘night and day’

In his Mexico City office, while the coronavirus pandemic has raged, Samuel Campos’s phone has been ringing off the hook with firms looking to move their manufacturing to Mexico.

“Since the trade deal this year, I think our volume is up around 30% to 40%,” said Campos, managing director at commercial real estate advisory firm Newmark Knight Frank, pointing to the revamped US-Mexico-Canada Agreement that went into effect in July.

The callers used to be mainly European and American, looking to escape China to avoid trade war tariffs or to be closer to their consumer markets. But in recent months, Chinese firms have been calling too – all keen on managing the costs and volatility that come with exporting from China to the US these days.

“These companies need a North American supply chain now because they don’t want to lose their contracts north of the border,” Campos added. And the recently signed trade deal has helped convince them that Mexico is a better launchpad to the US than China is.

This is not a new trend.

The low-end industry has been leaving an increasingly expensive China for up to a decade. Global manufacturing consulting firm Kearney’s China Diversification Index tracks the shift in US manufacturing imports away from China to other low-cost hubs in Asia. 

When the index started in 2013, China held 67% of those imports, but that figure fell to 56% in the final quarter of 2019.