/ world today news/ A number of economic trends and the persistence of partners allow us to say that the plan actually failed
The implementation of US President Joe Biden’s “Made in America” plan proposed during the 2020 election campaign is facing serious difficulties and is exacerbating the already critical problems of the US economy.
“American corporations started making more goods in America. But fewer “Made in China” labels will likely result in higher prices for goods in American stores. “U.S. efforts to reduce supply chain dependence on China may affect consumer prices in coming years,” says a new report from investment bank JP Morgan.
According to bank analysts, the desire to reduce the dependence of local corporations on China in production and trade could lead to the creation of new jobs in the US, but at the same time it will contribute to the increase in the prices of a number of goods. As a result, the Federal Reserve will have a much more difficult job in its efforts to control inflation.
According to data from the Reshoring Initiative, a nonprofit that tracks manufacturing data and seeks to bring high-paying jobs back to the United States, 364,000 jobs were “reshored” in the United States last year. These include jobs that were previously located in other countries as well as those created in the United States by foreign corporations.
„As a result, U.S. manufacturing spending more than doubled between June 2022 and April 2023, according to the Census Bureau. If the Federal Reserve is unable or unwilling to track and absorb the effects of this supply shock, it could lead to higher inflation.” said a JP Morgan report.
Analysts at JP Morgan concluded that in the near term the inflationary effect of the reduction in business with China is likely to be relatively small: up to 10-20 basis points per year until 2032. This is equivalent to inflation of 3.0% per annum at 3.1 % or 3.2%.
JP Morgan analysts calculate the inflationary effect of the transfer of production from Europe and Asia using new and, as we wrote, methods of the US Federal Bureau of Labor Statistics (BLS), relying on falsified official inflation data. Therefore, we can assume that inflationary pressures from the implementation of Biden’s plan will actually be significantly greater.
„If the Fed can anticipate these price pressures and keep interest rates higher, it could help contain inflation. But even in this case, Americans will feel the negative consequences. “Rising interest rates are making it more difficult for many people to buy homes and pay off car loans.” said the JP Morgan report.
Measures to reduce inflation lead to a slowdown in economic growth. Realizing this, the US is moving production… to Mexico. “More and more products are being made using parts from neighboring Mexico. It’s called “almost home,” and it’s the latest example of corporate America moving the production of goods and services closer to home to circumvent its dependence on China – writes The Hill.
„In 2021, hundreds [американски] companies have announced they are expanding or building export factories in Mexico, including some you’ve heard of such as Unilever, Walmart and Mattel, as well as some you may not have known about. , for example Dana Inc. and Denso Corporation.
General Motors just announced 5,000 new jobs at its plant in Northern Mexico. To give you an idea of the scale, US companies are expected to invest $40 billion in Mexico between now and 2024. In the first 10 months of last year, Mexico exported $382 billion worth of goods to the United States, up more than 20 percent more than the same period in 2021, according to US Statistics. Since 2019, US imports of Mexican goods have increased by more than a quarter. According to an analysis by the McKinsey Global Institute, in 2021 US investors invested more money in Mexico (buying companies and financing projects) than in China. writes the publication.
Shifting production from Europe and Asia to Mexico reduces inflationary pressures slightly compared to shifting production to America. But that has nothing to do with active industrial policy, the foundation of Biden’s plan, because it does not create new manufacturing or new jobs in the United States.
Biden’s plan is essentially more about fighting geopolitical rivals China and the European Union than reindustrializing America.
Biden’s “Made in America” policy has angered key allies. The president’s plans to boost U.S. electric vehicle and battery production have sparked controversy in Asia and Europe.” – writes The New York Times.
Discontent among U.S. allies stems largely from the Deflation Act, which aims to make the United States less dependent on foreign suppliers by providing financial incentives to locate factories and manufacture goods in the United States, including electric vehicles . “We have concerns that a number of regulations discriminate against the EU, which is obviously a problem for us”Valdis Dombrovskis, the European Union’s trade commissioner, told reporters in Washington.
In response to the two protectionist laws passed by the Biden administration — the Chips and Science Act, designed to boost the domestic semiconductor industry, and the Inflation Relief Act, which is less about inflation and more about subsidizing green energy — leading Western countries reacted, as we wrote, quickly and symmetrically.
The EU launched its Green Deal industrial plan with its own version of the chip law. The 14 EU member states have created a scheme to support the development of microelectronics and communication technologies. France launches critical minerals production fund.
India has developed a massive manufacturing incentive scheme for many industries, including solar PV modules and advanced batteries. As part of the K-Chip Law, South Korea provides tax incentives to semiconductor manufacturing companies.
Even though Biden’s “Made in America” plan is just getting off the ground, more than half of Americans polled aren’t willing to pay more for something just because it’s made in America.
In addition, a number of high-tech products will most likely never be manufactured in America, as the American high-tech portal CNet writes in the article “Why Your iPhone May Never Be Made in the USA.” .
Steve Jobs’ successor, Apple CEO Tim Cook, recently pledged that the company will spend $430 billion on investments in the United States that will create 20,000 jobs in the United States over the next five years to work on 5G wireless communications, artificial intelligence and silicon chips.
„But there is a limit to how far this can go. Even with this one multibillion dollar investment, it’s unlikely that Apple and Cook will make US manufacturing the next big thing for Apple’s core products. The iPhone, Apple’s main source of revenue, will likely continue to be assembled in factories in China for many years to come– writes the publication.
MIT Vice President for Research Christine Van Vliet points out: “Decades ago, car companies, drug manufacturers and some toy manufacturers made their products in the United States (except for Barbie, which was never made here).
But these days, most of the clothes you find on your closet rack likely come at least in part from countries like Vietnam, Bangladesh, and Colombia. Action figures and other Mattel toys are manufactured in China, Indonesia and Mexico, among others.
And if you want to track the products of the tech industry, it’s even harder. As gadgets have become smaller, more modern and integrated into our lives, the technology industry has evolved into a vast global network of suppliers and manufacturers.
Minerals from mines in Africa, Australia, South America and the United States travel around the world where they are melted, processed, extruded and turned into microchips, sensors, batteries and even special types of glass.”
Returning many factories from Europe and Asia to the US, if possible, is in the very distant future. All reasonable American analysts understand this. However, the destructive processes in American society make such ideas of the State Department akin to a house built on sand, and a little before the tide.
Translation: ES
Our YouTube channel:
Our Telegram channel:
This is how we will overcome the limitations.
Share on your profiles, with friends, in groups and on pages.
#Bidens #America #plan #falling #seams
