How Do Manufacturers Get Around Tariffs?

Willy Shih says manufacturers get around tariffs by moving the work, usually the final assembly, to a country the tariff does not hit. When a tariff lands on goods from China, the company moves that assembly to Vietnam or to Mexico, or finds another route around the barrier.

The same cost explains paths that look odd on a map. Cashews can be sold as coming from Vietnam even when they were grown in Ivory Coast or Ghana, because processing them there is cheaper. Fish caught off Alaska go to Qingdao to be processed and then come back, because that trip costs less than processing them at home.

He treats the detour as the normal first reaction. A barrier goes up, and the supply chain looks for a way around it. The shape of the chain is the market answering the cost.