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<\/figure>\n\n\n\nIn\nstark contrast, the opinions of professional economists are reflected in an\narticle titled, “Trade Wars Are Not Good, or Easy to Win” in The\nAtlantic on August 5, 2019, staff writer Derek Thompson, wrote, ” President Donald Trump has stubbornly insisted on Chinese tariffs over the objections of his economic advisers<\/a>\u2014not to mention the near-universal outcry of the professional\neconomic community. In a University of Chicago poll<\/a> of several\ndozen international economists, zero disagreed with the statement that \u201cthe\nincidence of the latest round of US import tariffs is likely to fall primarily\non American households.\u201d<\/p>\n\n\n\n Why\ndo the conclusions of the CPA research directors differ so greatly from the opinions\nof the economic community? The authors explained, \u201cOur results differ remarkedly\nfrom other economic modeling efforts regarding tariffs…The differences result\nprimarily from different assumptions about how businesses and consumers react\nto tariffs. Other models reflect a pro-free-trade bias and assume that (a) no\nproduction returns to the US as a result of tariffs (b )prices of US imports\nalways rise when imports move from China to third countries and (c) US\nconsumers react very negatively to higher prices, leading to educed sales and\noutput in the US economy. A close study of the available empirical evidence\nshows these assumptions are unwarranted.\u201d<\/p>\n\n\n\n The\nreport states: \u201cOur model consisted of two\nparts: a partial equilibrium model, which\nlooked at how production in China for export to the US responded to the presence\nof a permanent across-the-board tariff, and a general-equilibrium model, based on\nthe widely-used REMI economic model to explore\nthe effects of production shifts on the US economy over a five-year forecast period.\u201d<\/p>\n\n\n\n The\nreport takes into consideration China\u2019s retaliation against the tariffs and\nChina\u2019s moving manufacturing to the U.S. or other countries. It shows that the\ntariffs will encourage production relocation out of Asia and generate\nsignificant reshoring of manufacturing to the US by American manufacturers who\nhad established plants in China. This opinion concurs with the data collected\nby the Reshoring Initiative for several year showing that \u201cthe location\ndecision for manufacturers is not just about cost: reliable supply, closeness\nto customers, political stability, and building customer\/consumer brand\nawareness all matter!\u201d<\/p>\n\n\n\n The\noriginal May report went into more detail about the benefit of reshoring,\nstating, \u201cThe US job gains from PATB-25-induced reshoring are\ndisproportionately concentrated in the manufacturing sector, with 192,416\nadditional manufacturing jobs (27 percent of total jobs created by the tariff).\nThis is because the vast majority of US imports from China are manufactured\ngoods. By 2024, our model forecasts that $69 billion worth of annual production\nwill have migrated from China to the United States. While US production costs\nin many industries remain higher than in China, that is not the whole story.\nLocating production in the US offers other advantages, including lower\ntransportation costs, more logistical flexibility, and closer connectedness to\nconsumer markets, distributors, and senior management. Relocating in the US\nalso insulates companies against the uncertainty of potential future trade\ntensions. Some industries, such as apparel, have already seen reshoring due to\nthese advantages. A permanent tariff would speed up the process.\u201d<\/p>\n\n\n\n In a webinar to CPA members on\nAugust 1st, Ferry cited several examples of American companies reshoring\nproduction to the US; namely, Caterpillar, Stanley Black and Decker, Hasbro,\nWhirlpool, Optec, and West Elm. The website<\/a> of the\nReshoring Initiative lists nearly 3,000\ncompanies that have reshored, and the list grows by the week. <\/p>\n\n\n\n