{"id":3580,"date":"2026-07-16T21:43:26","date_gmt":"2026-07-16T21:43:26","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=3580"},"modified":"2026-07-16T21:43:26","modified_gmt":"2026-07-16T21:43:26","slug":"trump-has-tried-to-decouple-from-china-but-ending-u-s-reliance-on-the-country-would-cost-america-nearly-14-trillion-ey-warns","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=3580","title":{"rendered":"Trump has tried to decouple from China, but ending U.S. reliance on the country would cost America nearly $14 trillion, EY warns"},"content":{"rendered":"
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A new EY-Parthenon analysis calculated that the U.S., Eurozone, and UK would need to collectively invest an additional $23.6 trillion over the next 25 years in order to effectively stop relying on China in highly exposed sectors. The U.S. alone would have to invest $13.7 trillion, more than half of that sum, which includes the costs to build infrastructure, as well as improve research and development, manufacturing, software, transportation networks, and workforce training.<\/p>\n

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President Donald Trump has intensified U.S. efforts to limit reliance on China, including a 10% import tax under Section 122, which expires later this month, as well as additional levies from 7.5% to 100% under Section 301, which allows for the implementation of tariffs for alleged unfair trade practices, such as forced labor. Those duties are on top of efforts that came before Trump\u2019s second term to increase domestic manufacturing, such as former President Joe Biden\u2019s CHIPS Act to spur America\u2019s semiconductor chip industry.<\/p>\n

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Still, the U.S. heavily relies on China. The U.S. is the recipient of 14% of all of China\u2019s exports.While this is down from 20% in 2017, America still received 45% of its smartphone and telephone equipment, worth $51.5 billion, and 76% of toys, worth $14.4 billion, from China in 2024, according to the United Nations Comtrade database. Last month, China\u2019s export growth accelerated 27% from a year earlier, recovering from a double-digit year-over-year dip for most of the year, according to China customs data.<\/p>\n

These new calculations are an eye-opener for just how difficult it is to adopt a protectionist ethos in a globalized world, said Mats Persson, EY-Parthenon UK macro and geostrategy leader. Localization efforts, such as the U.S. push for domestic manufacturing and export bans on AI hardware, help create economic independence at crucial times of uncertainty. But that mandate has always been balanced with the desire for economic expansion, which is boosted by, oftentimes, cheaper labor and manufacturing costs from importing goods overseas. While this has always been the case, the AI boom and geopolitical tensions have made balancing these two ideologies an urgent matter, Persson suggested.<\/p>\n

\u201cYou have this dynamic, this dialect between these two forces, which has always been there for many hundreds of years in one way or another, but which is now so pronounced,\u201d Persson told Fortune<\/em>.\u00a0<\/p>\n

For both the U.S. and Europe, a massive push toward localization\u2014particularly through decoupling from China\u2014is just plain unrealistic: Chinese factory prices for certain components are between 20% to 100% cheaper than in the West as a result of the scale of production and supply chain density, meaning that for countries like the U.S. to establish supply chains independent from China, inflation would become structurally higher, rising about 1% to 2%.\u00a0<\/p>\n

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Managing high prices in the U.S. would mean implementing the equivalent of an Inflation Reduction Act per year, Persson said, referring to the landmark 2022 law that authorized about $891 billion in investments toward clean energy production, lowering prescription drug prices, and addressing the federal deficit. In the European Union, if supply-chain and infrastructure changes were to come from taxpayer-funded sources, the EU budget would have to effectively double, according to EY-Parthenon.<\/p>\n

\u201cWe\u2019re not going to achieve these levels of investments,\u201d Persson said.<\/p>\n

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Countries can still make realistic pushes toward localization, however. The U.S., in particular, is well-positioned to do so compared to Europe because of the depth of its capital markets, the power of the U.S. dollar as the global reserve currency, and greater energy independence compared to EU countries, according to Persson. While the U.S. has to depend on China for key resources like critical minerals that will limit the independence of its semiconductor supply chains, the country can improve its pipeline of supply-chain talent to increase manufacturing productivity. As a result of a skills gap in manufacturing enabled by decades of offshoring, a projected 2.1 million manufacturing jobs may be unfulfilled by 2030, according to Deloitte and The Manufacturing Institute.<\/p>\n

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There\u2019s more outside of the U.S. and Europe\u2019s control: China has long-term industrial policies that have made it incredibly efficient, and though less nimble, it has more experience than the U.S., and particularly the EU, in making policy decisions based on long-term cycles. The EU, in particular, faces challenges having to balance the democracies and policies of its 27-member coalition.<\/p>\n

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However, the world was also once more globalized than it is today in some ways. Prior to Russia being excluded from the G8 in 2014 following its annexation of Crimea, parts of Europe were directly dependent on Russia for oil and gas. Following Russia\u2019s invasion of Ukraine, the West further distanced itself from Russia, which formed closer trade partnerships with China and India. It\u2019s a testament to ever-changing trade dynamics and evidence massive supply chain changes aren\u2019t always within a country\u2019s control, Persson noted.<\/p>\n

\u201cIt\u2019s very hard to see a world in which we go back to that level of globalization within the next couple of decades, nor do I think this is in the way the end of globalization,\u201d he said. \u201cSo it\u2019s probably going to be a rather messy, non-linear type of globalization.\u201d<\/p>\n

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\u201cWe’re not going to achieve these levels of investments,\u201d EY-Parthenon partner Mats Persson told Fortune.<\/p>\n","protected":false},"author":1,"featured_media":3579,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[],"class_list":["post-3580","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-supply-chains"],"yoast_head":"\nTrump has tried to decouple from China, but ending U.S. reliance on the country would cost America nearly $14 trillion, EY warns - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=3580\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trump has tried to decouple from China, but ending U.S. reliance on the country would cost America nearly $14 trillion, EY warns - 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