Market and geopolitical risk analysts said everything has gone wrong, undermining supply chain reliability over the last several years, and businesses are creating redundancy but are still anxious about the additional costs that entails.
Trade ministers from the G-20 nations reaffirmed the role of the World Trade Organization, pledged to promote resilient global value chains and said they will increase transparency of sanitary and phytosanitary measures and technical barriers to trade within the WTO.
Compliance with the Uyghur Forced Labor Prevention Act has "significantly impacted" U.S. fashion companies' "sourcing practices," and many importers are diversifying away from China and other countries in Asia to mitigate supply chain risks, the U.S. Fashion Industry Association said in its annual survey of industry executives released July 31. Nearly 80% percent of survey respondents said they plan to reduce apparel sourcing from China over the next two years, with a record high 15% planning to “strongly decrease” sourcing from the country.
House Select Committee on China Chairman Rep. Mike Gallagher, R-Wis., said he wants U.S. companies that source from or have operations in China to "take off the golden blindfolds, and assess the risk." Gallagher and the committee's ranking member, Rep. Raja Krishnamoorthi, D-Ill., were speaking at an event hosted by Punchbowl News on July 20.
Treasury Secretary Janet Yellen said no decision has been made yet on whether there will be an executive order limiting outbound investment in China. "It's still something being discussed in the administration and the timing of it is not yet certain," she said on "Face the Nation" from China, before she returned from a diplomatic visit there. "But I wanted to explain to my Chinese counterparts that if we go forward with this executive order, that we will do so in a transparent and narrowly targeted way." She said what's being considered is only for "very narrow high technology areas," and should not significantly impact overall investment in China.
Japan's senior deputy minister for foreign affairs, who was responsible for preparing for the G-7 summit in Hiroshima (see 2305220008), told Center for Strategic and International Studies scholars that Japan had two goals for the summit -- outreach to the Global South and supporting a "free and open international order based on the rule of law."
Treasury Secretary Janet Yellen said she is “concerned” about China’s new export controls on critical minerals used to produce semiconductors (see 2307060053), saying the U.S. is still assessing the impact but that they “remind us of the importance of building resilient and diversified supply chains.” Speaking during a July 7 roundtable with American businesses in China, Yellen said the administration is working to make sure U.S. companies are competing with China on a “level playing field.”
The U.S. “firmly” opposes export controls by China on certain metals used to produce semiconductors, a Commerce Department spokesperson said July 6. “These actions underscore the need to diversify supply chains,” the person said in an email. “The United States will engage with our allies and partners to address this and to build resilience in critical supply chains.”
Top European and U.S. officials have talked about the need for their EU-U.S. Trade and Technology Council to produce concrete outcomes, and two were achieved in Sweden, at the fourth meeting -- standard conformity on how to charge electric heavy duty vehicles.
U.S. Trade Representative Katherine Tai said she and Australia’s Trade Minister Don Farrell, meeting on the margins of the Asia-Pacific Economic Cooperation trade ministers' meeting, agreed the negotiations on the trade pillar of the Indo-Pacific Economic Framework for Prosperity have been constructive.