US won’t be able to force global supply chain restructuring by administrative means

By Xiao Xin Source:Global Times Published: 2018/11/28 21:53:40

The use of administrative means to force a restructuring of supply chains isn't a recommended policy for the US government amid the trade dispute with China. It is hoped that Washington will take the opportunity at the upcoming G20 summit in Buenos Aires, Argentina to reach a trade deal with Beijing, reducing the uncertainty that's hovering over global supply chains.

"Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland," US President Donald Trump wrote in a tweet posted on Tuesday. Stating that nothing is being closed in Mexico and China, Trump tweeted "We are now looking at cutting all @GM subsidies." The tweet came a day after the US automaker announced plans to lay off 14,000 workers and close five facilities in North America, stirring concerns over the possible repercussions of US administrative orders on supply chains across the globe.

GM said the layoffs and shutdowns are designed to prepare it for a future of autonomous and electric vehicles. The company is also responding to a consumer move away from sedans toward trucks and sport utility vehicles, according to CNN. Apparently, it is a well-thought-out decision by the company to remake its business. The US automaker must have chosen a best-case scenario, based on current supply chains. There is little doubt businessmen have a natural acumen in finding ways to generate profits. In the process, they make business decisions that can maximize their earnings.

Also noteworthy: the looming job cuts offer a glimpse of the languishing business climate in the US amid the trade tussle, which has hit US businesses with increased tariffs on steel-related products including auto parts. The US government ought to reflect on its trade policy, which has put a drag on both the US and global economies.

Under no circumstances will the US be able to restructure the world's supply chains by administrative means. If the fundamental problem is ignored while new mistakes are made, it is likely the US government will find itself pitted against its domestic businesses, and the US will no longer be a stabilizer of the world economy. The G20 gathering, therefore, should be a chance not to missed by the US administration to strike a deal with China to end the trade spat as it seeks to make America great again.

The author is a reporter with the Global Times.


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