A renewed wave of “Made in America” ​​will make things like clothes and electronics more expensive | Popgen Tech

• Many US companies are moving part of their supply chains back to the US.
• It’s a response to supply chain disruptions that companies have faced in recent years.

In the years ahead, American shoppers may be able to buy more American-made goods, but that may mean paying more for them.

Apple, Walmart, General Motors, Intel and Lockheed Martin are among the corporations that have taken steps to “reposition” their supply chains, which consists of producing more in the US or buying more from US suppliers.

It’s the result of significant shortages of goods as the pandemic and Russia’s invasion of Ukraine have wreaked havoc on supply chains, and part of a broader economic “distancing” between the U.S. and China that dates back to trade wars waged during the Trump administration.

Concerns about national security and human rights are among the reasons the US has begun to cut ties with China, while the energy crisis caused by Russia’s incursion has forced businesses and countries to seek energy independence.

The headaches faced by American corporations are forcing them to bring their supply chains closer to home and more under their control. According to a recent survey of executives and investors conducted by consulting firm Teneo, 91% of executives said they are preparing for deglobalization. Just under half (46%) said they are adjusting their supply chains, and about a third (32%) said they are moving their workforce.

It could create American jobs. The downside, however, is that consumers may ultimately be forced to pay more for the Made in America economy.

For example, a November report by Goldman Sachs said that reshoring could have “inflationary implications” and that amid efforts by US companies to improve supply chains, “reshoring poses a price risk.”

For example, earlier this month Taiwan Semiconductor Manufacturing, the world’s largest chipmaker, announced the opening of a second factory in Arizona, making it the largest foreign direct investment in US history.

“These investments help us build and strengthen our supply chain here in America,” President Biden said in a speech at TSMC, adding that “American manufacturing is back.”

But earlier this year, TSMC founder Maurice Chang said that US efforts to increase domestic chip production would be “wasteful, expensive and futile” because “US chip production is 50% more expensive than Taiwan”.

That means Apple, for example, which has already pledged to become the largest customer of the Arizona plants when they come online in 2026, could start facing higher costs, which could eventually lead to higher iPhone prices for American consumers.

Foreign manufacturing created cheap products for Americans

Over the past two decades, cheaper overseas manufacturing costs in countries like China have driven down prices for goods like smartphones, televisions and computers, University of Michigan economist Mark Perry previously told Insider. As of July, prices for clothing, toys and televisions had fallen 2%, 72% and 98%, respectively, since 2000, according to Perry’s analysis of Bureau of Labor Statistics data.

“Intense global competition for tradable goods such as clothing, footwear, electronics, televisions, etc. will ensure that the prices of these goods remain very, very affordable for American consumers,” Perry said.

But as more companies move their supply chains closer to home, that could gradually change. While Apple, for example, may be “happy to pay a little more” to ensure supply chain diversity, as SemiAnalysis’s Dylan Patel previously told Insider, this could end up creating pricing pressures that will be passed on to American consumers.

Subsidies and automation can help keep US manufacturing competitive

Under price pressures, the US and its corporations may try to keep prices of US-made goods under control.

TSMC’s factories, for example, will be partially subsidized by the US government under the CHIPS and Science Act, which could help make production 15-20% more expensive, down from 50%, Chang said.

In addition, some foreign companies “looking to protect margins” will use automation to cut costs, Geoffroy de Carbonel, vice president of product management and strategy at Oracle, told Insider. Although some jobs may be lost as a result, de Carbonell believes that automation will create “new but different jobs.”

“The redevelopment will not replace the jobs that have been lost over the last five decades, but ultimately it will be positive in terms of job creation,” he said.

Ultimately, however, strong U.S. job creation could be what forces some re-service businesses to raise prices in the coming years. There are more than 10 million job vacancies today, and an aging population and declining immigration could lead to continued labor shortages in the years to come.

If reshoring companies have to raise wages to attract workers, they may decide to raise prices even more to protect their margins.