Not just buy American
While the goal of President Donald Trump’s tariffs is to bring manufacturing back to the US and make America great again, he’s also open to Americans buying goods from non-tariffed countries instead of China. On May 14, he tweeted, “China buys MUCH less from us than we buy from them, by almost 500 Billion Dollars, so we are in a fantastic position. Make your product at home in the USA and there is no Tariff. You can also buy from a non-Tariffed country instead of China. Many companies are leaving China.”
What criteria are we using?
The universe of nontariffed countries is big—at least for now. However, another tweet by Trump can help us zero in on Asia. A tweet on May 13 says, “Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia.”
Now that we’re clear about the focus on Asia, the first parameter for our analysis is demographics. We can judge countries based on demographics such as population, median age, and female workforce participation rate.
We can also look at export capabilities, including overlap with China’s exports to the US and the potential to increase exports while maintaining economic stability.
The relationship with the US is perhaps the most important factor in judging the potential of countries to provide a replacement for Chinese exports. We must consider a country’s trade with the US, partnerships (if any), and general relationship with the US.
For this exercise, we’ve short-listed six countries from the Association of Southeast Asian Nations: Vietnam, the Philippines, Malaysia, Thailand, Singapore, and Indonesia. We’re excluding Brunei, Cambodia, Myanmar, and Laos, as these countries don’t have sophisticated manufacturing sectors yet.