At around eight years and starting during the Trump presidency era, the U.S. and China trade war showed no signs of changing. Treasury Secretary Janet Yellen visited China last week, which did not help.
Yellen warned China on Monday that Washington would not accept new industries being decimated by Chinese imports. Reuters reported that President Biden did not want the China shock of 2000 to repeat. In that era, the U.S. manufacturing industry lost 2 million jobs.
The U.S. is among the Western countries that are pivoting its manufacturing out of China. When the country locked down the borders and disrupted work, it put the world economy on a secondary priority. Today, firms like Ford (F) and Intel (INTC) are building factories in the U.S. Within a few years, the U.S. manufacturing industry will add more jobs.
To thrive globally, U.S. manufacturing firms need to compete effectively against China. Known as the world’s manufacturer, workers are more efficient and cost relatively less than those in Western countries. As a result, the U.S. may have trouble competing with China’s electric vehicle, solar energy, and lithium battery economies.
China is unlikely to back down in building its competitive advantages. Firms like BYD and Nio are ready to increase EV exports globally.
Expect lithium miners and solar energy firms to face headwinds. Prices continue to deteriorate in those two industries.
