What would happen in the US if Asian imports were cut off?

Factual Questions
1

Seems like this should be a common question, but the search function just sits there and spins, so here goes:

I was reading about N Korea’s crazy dictator, and I notice that almost all my stuff — cars, computers and peripherals, TVs, stereos phones, cameras, clothes, shoes — are made in Asia. I know the US still has car factories, and some computer chip plants, but unless I’m mistaken, most of the hard drives, peripherals, and finished computers are made in Asia.

So what if there was a war, or a blockade, or a natural disaster (I remember how hard drive prices tripled when there was a flood in Thailand a few years ago) that cut off Asian imports to the US for long enough to exhaust any stockpiles. Would our economy collapse? Would we have the will to build our own factories? How long would it take? Where would the prices stabilize?

Are we one crazy dictator away from complete disaster?

2

An event of this magnitude would affect more than just the US economy. Don’t forget there are always two sides to the import/export system. If we cannot import, somebody else cannot export.

But let’s get real. An event of this magnitude could be for all the marbles and America has the most and the biggest shooters.

3

True, blockades usually hurt more than one side. As well as the imprting country it also hurts the manufacturing country, or, the State enforcing the blockade(see Napoleon having to invade Russia as such an instance). It’s difficult to forsee the entire Asian continent being part of such a scheme.

4

All that is true, but again, if it’s a natural disaster, say a massive earthquake that destroys factories and creates a tsunami that destroys docks, then our shooters won’t help us, nor will the fact that other countries are also suffering. My question is, how long would it take us to gear up our own factories? Or would a lack of raw materials make it moot?

5

The US is 2nd largest manufacturer after China, and a lot of what China makes is crap.
If the US needed to start making 2nd-rate junk, it would be no problem - the question is how cheaply we could make it.

6

I’m not going to try and dispute your claim since it’s a pretty fuzzy claim, but just note what China’s top 10 exports to the US are:

  1. Machines, engines, pumps: $86.7 billion
  2. Electronic equipment: $82.9 billion
  3. Furniture, lighting, signs: $23.1 billion
  4. Knit or crochet clothing: $14.8 billion
  5. Clothing (not knit or crochet): $13.4 billion
  6. Footwear: $13.3 billion
  7. Toys, games: $12.9 billion
  8. Plastics: $12.2 billion
  9. Vehicles: $10.5 billion
  10. Medical, technical equipment: $8.6 billion

Some of that, I’m sure, is “junk”, but I’d be surprised if most of it was.

Anyway, per the OP’s 2nd post, a natural disaster is going to affect only a small portion of Asia, which is quite different from what you were asking in your OP-- ie, “all of Asia”.

7

I’m not sure how this is helpful in the context of the OP, which is “how would the US be affected if Asian imports were cut off?”

Consider the following:

  • over half of the global output of computer chips are made in Asia (mostly Taiwan)
  • the majority of LCD panels are manufactured in South Korea
  • iPhone and iPad components are largely sourced and manufactured by a Taiwanese company (Foxconn) in factories based in China
  • over 35% of composite structures for the Boeing 787, including parts of the fuselage and wings, are manufactured in Japan
  • a significant portions of GM automibile components are manufactured in China

This doesn’t answer the OP’s question, but it suggests that it would have significant effects on the US economy.

8

On a good note, Walmart would be screwed.

:smiley:

9

Yeah, Asia is a big place. We do tons of trade with China (#2 trading partner), Japan (#4), South Korea (#7), Taiwan (#11). Any natural disaster that would stop trade from China, Japan, South Korea and Taiwan would be essentially a global catastrophe, possibly on apocalyptic scales. Even one that would just knock out all of China’s trade would almost be on that level, China is a big country geographically. It’s not unrealistic for some portion of China’s economy to briefly be closed for business if a few key ports are hit with some disaster, but all of them? For extended periods of time? I imagine if things ever get so dire we’d be at a point where our government would be operating in WW2 style manner. Meaning nationalizing factories, ration cards, seizure of private stockpiles of things that were deemed essential to the functioning of society. I don’t know which things that would be.

Any such big catastrophe would have such large world implications we’re talking about a whole different life, for everyone on Earth.

10

Indeed. We might look at the aftermath of WWII when much of the world’s industrial strength was destroyed. There might be a temporary renaissance in manufacturing in the US and Europe until Asia was back up and running again.

11

With the exception of 4, 5 and 6, we also make a lot of that stuff internally, or they’re things that don’t require specialized PP&E, but are just cheaper to produce over there (games, toys, etc…)

I suspect that if there was some sort of calamity that prevented Asian imports from reaching the US, there would be a period of high prices on certain items that couldn’t be re-sourced from elsewhere, and that manufacturing facilities have to be built from scratch, or expanded/repurposed.

12

There is a very interconnected global supply chain, and Asia is a very critical piece of that supply chain. A 20 cent spring can keep a car from running, and if it is only manufactured in Asia (and no one knows), then you’re screwed. Doesn’t matter if 99% of the parts for your automobile or tablet are made in the US of A, missing one part can screw you over. It will take years if not decades to shift the supply chain to the US if that was needed.

What you don’t understand is that the US imports a ton of critical components from Asia. The US (and all other global automakers) import on ton of components. I sold stuff to the global automakers in China for 8 years. They all source billions if not tens of billions of dollars worth of automotive parts. Some of those parts don’t have US substitutes and are critical to auto to be able to run.

It might not be that dire but certainly the number of models will shrink considerably. May end up being one passenger car engine will work at the beginning as everyone starts to figure out what parts of the supply chain are missing and then build that up.

13

Who is this “you” of whom you speak?

14

This is one where it is tough to not fight the hypothetical. Yes, if all trade with Asia ceased, it would have a huge impact on the US economy. Having said that, this is just not something that could realistically happen without some sort of cataclysmic event. Specifically, when the OP says:

The answer is “No”, because there is not way in the world that North Korea could cause all trade to be shut off.

15

It’s a hypothetical question.

16

There absolutely, without a doubt, would be societal collapse. Global trade is simply too tightknit in a way that’s impossible to unravel. It’s not about the finished goods that people see on store shelves. It’s about the machines that make the machines and the machines that make the machines that make the machines and so on.

For example, CPUs are still being made in the US and Micron has a single DRAM factory in the US but, AFAICT, all cellphone basebands are made in Asia. Most of the world’s cotton mills are in Asia and so are most of the world’s steel mills. China has some 75% of the world’s rare earth output and also the majority of the world’s solar panels.

This is just a minute fraction of the supply chain that would be disrupted. A million things people never even think about in their day to day life would become unavailable. Oxygen sensors, hypodermic needles, solenoids, nozzles, food dyes, screws, there’s a million things in our everyday environment that we would need to figure out if we could source in adequate amounts if Asia dropped off the map.

Not to mention, if we can’t trade with Asia, we probably can’t trade through Asia either and the Malacca Strait is the heaviest trafficked shipping lane in the world.

The problem is our economy is so interdependent it’s impossible to fall back gracefully. We couldn’t even elegantly downgrade to 1970s technology because so much of our current infrastructure is reliant on other parts of our infrastructure to work. For example, if we could no longer process credit card transactions on the network because some key component is coming from Asia, we could still theoretically use those old ca-chunk style machines. But there’s not enough ca-chunk style machines in existence nowadays to handle the load, nor could there ever be because we’re processing thousands of times more transactions than we were back then. If the credit card network starts breaking down, then the banks start collapsing. If the banks start collapsing, then companies can no longer get the financing needed to rebuild all the infrastructure. As the companies start collapsing, people start rioting and destroying even more stuff. It all descends into chaos and a reversion to the dark ages. There’s not elegant middle ground, it’s a binary state of affairs.

I’d say if we had, say, 10 years advanced warning that trade with Asia would cease abruptly and we devoted those intervening 10 years solely to this problem, we could maybe, maybe devolve down to a 1970s or 80s style technology without mass societal collapse. Anything more drastic than that means the end of civilisation.

17

I agree

While the economics or it all would be upended (Happy Meals certainly rely on super-cheap mfg) I doubt there is any sector which is completely unrepresented in the US, and therefore it becomes a question of scale-up rather than expertise.

So there would be a period of high prices and limited availability, but I bet it wouldn’t take long before things settled down (albeit at higher prices) and anything important would be available.

18

Cell phones are actually manufactured in other parts of the world - although I haven’t had to go there in person, I’ve brought up lines for my past products in Hungary and Mexico. Brazil also has a presence there. When I was in the game, we had some manufacturing in the US and Canada, too. Those last two were mostly for prototypes, but we did do production runs when it made sense. Not enough infrastructure to handle worldwide demand, though.

Your comments about supply chain are pretty much spot-on, although there is a great deal of work by companies to keep that as diversified as possible. Components that were single source usually had production factories in multiple geographic locations. And we worked with our suppliers to understand their supply chain as much as possible, too.

I remember a big natural disaster a few years ago - flooding, I believe - that threatened to disrupt our manufacturing capabilities. Our supply chain team was quickly able to identify the very few components we had that were single-sourced from that region, and we were able to come up with work-arounds.

Of course, if all of Asia was off-limits, the problem would be much worse.

19

As others have said, there is too much interdependence. This is really pissing off China and Japan with their occasional brinksmanship over the bits of rocks in between Okinawa and Taiwan. The Chinese make moves and the Japanese freeze things in customs. The Japanese do things and the Chinese cut their rare earth elements.

I was working in Japan heading the local branch of a US manufacturer when RoHS was implemented. There were a number of products which we had to abandon because they could not be re-engineered to meet the new environmental standards. There weren’t lead-free replacement parts. As China Guy points out, for the want of a nail you’re screwed. (No pun intended.)

It’s not a matter of will concerning building factories, it’s that the technologies used to build factories are dependent on Asia (as well as Europe and the US). Things like machine tools, the equipment used to manufacture products. This is the problem which Shalmanese talks about. In 1970s technology, machine tools had nationality, but they don’t anymore. The electronic components are manufactured in Asia, as are the displays and other bits.

If Asia were to drop off the map (which would inconvenience me for obvious reasons), you couldn’t manufacture the machine tools necessary to make new car factories. The US and Europe would first have to build factories to build 1970s era machine tools to build 1970s electronics to build new car factories. Sorry, it’s worse. You have to build steel mills in order to build factories to build 1970s era machine tools to build 1970s electronics to build new car factories. But you have to reinvent the processes involved in building steel mills because no one in the West knows how to do that anymore. Plus all the architects, engineers and designers all use modern methods which may or may not work any longer.

Are flat panels manufactured anywhere outside of Asia?

20

The part I was answering was not. The hypothetical was:

The question I answered was:

And the answer is pretty clearly “No”