 
 
Labour is not a major factor
 
To implement this initiative for Trump is not so simple
Hello. I'm Tatiana Ovchinnikova
and today video is
 
 
 
We look at this through the prism
of Trump’s interview to Fox News.
In this interview Donald Trump commented on China:
By doing this it could help to save hundreds of billions of dollars.
Even some experts
classify those kinds of comments
as irresponsible or sensitive,
this interview is very remarkable
Why? Because in this interview Donald Trump
has outlined his economic strategy.
This is aligned with the election slogan
"Make America Great Again".
Trump's administration is
pushing the initiative to remove
industrial supply chains
from China
I'm very disappointed in China.
We could do things in our country.
 
We used to make our own product
 
I saw our that our car industry is leaving,
going to Mexico.
You know, Mexico makes 30% of our cars.
So again, Trump emphasises
his intention to bring manufacturing back
to America.
What's about Apple?
We gave Apple a little bit of a break
because they’re competing with a company
that was a part of a trade deal that we made.
So it was a little bit unfair to Apple,
but we’re not allowing this anymore
You know if we wanted to put up our own border like other countries do to us,
Apple would build 100 per cent of its products in the United States.
One incentive, frankly,
is to charge tax for them when they make product outside.
 
Trump has clearly stated his intention
to return the manufacturing back to the U.S
To implement this initiative for Trump is not so simple
According to data
by the United Nations Statistics Division Statistics
 
 
 
 
The U.S. economy is
much less reliant on the manufacturing
 
In another part of the interview  Trump revealed that
 
large parts of the F-35 fighter jet are produced in Turkey
 
Strategic sectors became politically sensitive
and dependent on foreign relationships.
Let’s dive into the theory...
to understand what is behind Trump's strategy?
In the previous video, we have outlined
that outsourcing is the major characteristic of Global Value Chains.
The key framework within GVC methodology is to determine
in-house versus outsourced production.
The roots of such a decision -making process
 
 
 
Later the value chain concept was
popularized by Michael Porter in 1985
 
The main thought was to apply the Ricardian principle
of comparative advantage to value chains.
And the comparative advantage
refers to the opportunity cost.
The New Oxford American Dictionary defines it
as "the loss
of potential gain from one alternative,
 
when another alternative is chosen."
This theory is based on the assumption
of the free-market without borders and
national interests.
There is a deep contradiction.
Trump refers to that.
He doesn't want to consider
these kinds of methods
The cheap labor turned out to be very expensive,
And when you add what’s costing by us
with our drugs, our pharmaceutical products,
 
It should be considered the risks related to pandemics,
the decline in demand,
the political sensitivity of strategic sectors,
 
the necessity to create jobs and production in the country.
And this is the trend for
each big economic region.
 
Countries  develop production within
those blocks
The cost of intra-regional deliveries
declines
 
We should also remember about
the impact of the economical shutdown
on the market demand.
On 29th of April, US Secretary Michael Pompeo said that
they  discuss  with a number of states
Australia, India, Japan, New Zealand,
The Republic of Korea, and Vietnam
how they  ".. restructure these supply chains to prevent
something like this from ever happening again."
So, they are finding the strategic partners to implement
the long term strategy.
Just after this interview,
there was a an announcement
semiconductor company TSMC
which is planning
 
to build USD 12 billion a five-nanometer semiconductor plant in Arizona.
 
TSMC is making up over 50%
of the world's chip.
It is intended that this complex
will be vertically integrated.
Trump’s comment on Europe
 
“if you take Europe, European Union.
It was formed for the benefit of themselves against us.
It was formed to hurt us.
If you take the European Union, Maria,
it’s so sad.
They send cars over, no tax.
If we want to send a car over there, it’s an impossibility.”
Currently, the US remains
the most important trade ally for all EU.
Here is the graph for the exports
and imports of goods with China and the US
% of the total, 2018.
The only area in which EU´s
 
economic links are significantly more
substantial with China than
with the US is the import of goods.
 
However, Germany’s relationship with the US
has taken some particularly hard punches lately.
 
In Europe, there are growing fears that non-EU investors
may take advantage of depressed valuations
of strategically important  European companies.
Just in late April Germany’s cabinet
has approved
draft legislation
designed to tighten
the foreign acquisition rules.
Any non-European foreign company planning to buy
more than 10% of a German company
operating a “critical infrastructure”,
such as water, energy,
infrastructure related to healthcare,
telecom,
are required to notify transactions
and to obtain clearance
for acquisitions of over 10%.
All these measures have coincided
with a steep decline of Chinese investment.
Chinese investment in Germany dropped over 70%
last year.
and almost 95% in France
Currently, the investment level
back to 2013 levels
 
The majority of investments went towards Northern Europe,
and also there is a sectoral shift
from automotive towards consumer goods
and services.
What's about China?
China is the biggest worldwide economy.
China and the USA are the biggest markets.
China is
approaching different countries and regions
and negotiating regional trade agreements.
China shifted
some of their sourcing  towards the Asian region
and the imports in 2020 were up.
 
 
 
 
Hope you liked this video.
Thanks for watching.
