'Rehoming' supply chains: US will pay for companies to relocate back home from China

Wed 27 May 2020
Posted by: William Barns-Graham
Trade News

china trade

First Japan and now the US. One of the predicted consequences of COVID-19’s economic disruption is starting to come true: countries actively boosting domestic production to lessen dependence on the factories of Asia.

Earlier this month, the Japanese government announced a range of subsidies to reinforce the country’s supply chains, including a fund of 220 billion yen to promote domestic output of items that the country currently imports.

This includes financial help to Japanese companies with production sites overseas to relocate back home.

To describe the trend, a new phrase has entered the lexicon of economists: ‘rehoming’, which was once all about domestic pets and finding them better environments in which to live.

White House offer

As part of his ‘America First’ policy, US president Donald Trump has repeatedly talked of encouraging American multi-nationals to relocate manufacturing back home.

Yesterday, US president Donald Trump’s chief economic adviser said the US government will pay the costs of US companies with operations in China to relocate home.

Larry Kudlow was talking to Fox News about rising tensions between the US and China, criticising the country’s increasing interference in how Hong Kong is run.

The US is in negotiations with China on a trade deal. However, President Trump has been critical of China for being the first source of coronavirus and vocal about American “over-reliance” on China for technology, PPE equipment and other goods. 

Kudlow said yesterday: “We welcome any American companies in Hong Kong or China mainland, we will do what we can … to pay the cost of moving if they return their supply chains and production to the United States”.

Pharma rehoming

Earlier this month, President Trump vowed to bring US pharmaceutical manufacturing back to the US, making specific reference to Ireland, where Johnson & Johnson and Pfizer are among those with factories.

Asked about America’s dependence on drub manufacture in China, Trump said:

“It’s not only China. You take a look at Ireland. They make our drugs. Everybody makes our drugs except us. We’re bringing that whole supply chain back.”