Macq-ro insights:Factory Asia at risk,the numbers

President Trump is attempting to roll back the ICT revolution’s 30-year impact onmultinationals (MNCs) sliced and diced supply chains, and to bring factoriesback to the US. To succeed, economic incentives have to be altered.

Dramatic developments on US trade policy, the Budget and tax reform areexpected. Whilst attention is focussed currently on the potential for import tariffs,the upcoming legislation for a radical reduction in US corporate tax rates (from35% to say 20%) would also contribute to a revival in US-based manufacturing.

Whilst it is not clear yet how President Trump will proceed on trade, candidateTrump provided a detailed roadmap in a speech on 28 June 2016, pages 2-3.

We believe Factory Asia is facing its most serious challenge in decades.

A 45% tariff on Chinese imports into the US would result in an estimated 14%volume decline in Chinese imports. US domestic production would replace half;other countries would supply the balance. The impact on US GDP would bemarginal, possibly positive. The real damage arrives with retaliation, pages 4-6.