Despite the fact that President Donald Trump and Chinese President Xi Jinping have negotiated a temporary cease-fire in the trade war, many major tech companies are moving ahead with plans to close down factories in China and relocate them elsewhere.
The future of U.S.-China trade relations is still murky enough, and the first round of tariffs continue to bite hard enough, that companies from U.S. PC giants HP and Dell to software and service-based Amazon, Google, and Microsoft are committed to pulling out of China. These are only the latest companies signaling that they are going through with the manufacturing move.
This may incidentally align with Trump’s strategy of putting pressure on China for more favorable trade terms, but it remains highly unlikely that it will drive his “reshoring” initiative to bring manufacturing jobs back to the U.S.. There are more than a few reasons for this, the biggest of which is that manufacturing in the U.S. still costs a lot. Attempting a pivot to U.S. manufacturing on a large scale would lead to a radical explosion in the price of devices. It would also mean having to fundamentally reconfigure shipping logistics, which major tech players would rather avoid. And, of course, it would also cast huge ripples through U.S. trade balance sheets, which, while not a direct concern to U.S. tech firms, would probably lead to stock market instability.