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U.S. GDP is $21.7 Trillion. Imports and Exports combined (foreign trade) are $2.1 Trillion, or 9.7% of GDP.

Any country whose foreign trade is less than 15% of GDP is essentially a closed economy. In addition to being a closed economy, the U.S. is 27% of world GDP.

China’s GDP is $14.1 Trillion, and $4.62 Trillion (33% of GDP) is foreign trade. They are the world’s largest trading partner. China’s GDP is second only to the U.S., and represents 18% of the world’s GDP.

No matter how severe the impacts to foreign trade caused by the coronavirus, it will be an inconvenience to the U.S, and devastating to the Chinese.

For all of the items currently single sourced from China, an alternative source can be developed or found somewhere else, albeit at a higher cost. Those who go to the trouble of developing alternative sources will develop more than one so that competition will eventually reduce the cost.

Once that development/sourcing leaves China, it is highly unlikely it will go back.

Hmmm...

Have you ever been in the position of working for a small or medium size manufacturer and having to “re-source” a custom import part from a new supplier in a new country of supply?

I have, multiple times.

In rare cases, everything goes smoothly, Mr. Murphy stays away, the global supply of Acetaminophen is not dented, the bean counters defer their plans for murder, and you actually have production quantity parts hit your warehouse, pass inspection, and are loaded to run. All that in 3-4 months.

More typically, you’re on the 2nd “new” vendor, it took ‘em 3 samplings (each 3-4 weeks apart) to get the SAMPLES “right”, then 2 pre-production runs to get THAT right, “Murphy” knows you better than your wife, Tylenol stocks have risen 45%, the bean counters have reportedly left to procure honey and ants, and you are cursing some inexplicable holdup of the 1st production parts shipment in Customs... 7 months after you started.

With luck, that’s US Customs and not your new vendor’s country’s Customs Agency.

The “ripple” effects are considerable too.

Ok, I spiced that up slightly, but the time frames are not unusual. And the bean counters don’t really buy honey and ants. They merely suggest a low price source to your boss. For axes. The production manager concurs.

Now multiply that for dozens of parts for a typical modest size company.

At least the new vendor thinks you are great and may hint they have a position open.

(I never did actually get fired for any such problem. Nobody else wanted the headaches!)

"U.S. GDP is $21.7 Trillion. Imports and Exports combined (foreign trade) are $2.1 Trillion, or 9.7% of GDP.

Any country whose foreign trade is less than 15% of GDP is essentially a closed economy. In addition to being a closed economy, the U.S. is 27% of world GDP.

China’s GDP is $14.1 Trillion, and $4.62 Trillion (33% of GDP) is foreign trade. They are the world’s largest trading partner. China’s GDP is second only to the U.S., and represents 18% of the world’s GDP.

No matter how severe the impacts to foreign trade caused by the coronavirus, it will be an inconvenience to the U.S, and devastating to the Chinese.

For all of the items currently single sourced from China, an alternative source can be developed or found somewhere else, albeit at a higher cost. Those who go to the trouble of developing alternative sources will develop more than one so that competition will eventually reduce the cost.

Once that development/sourcing leaves China, it is highly unlikely it will go back."

It all sounds pretty convincing. And I'm right there wanting to be with you. America is powerful. China could disappear and it wouldn't be a blip. I want this to be true, but sadly it ain't. At least with short notice.

The truth is, we just don't know. When Caterpillar makes a tractor, how many of its components are sourced directly from China? How many parts which Caterpillar purchases in Mexico, or Brazil, or Vietnam, or India--are assembled from precursors made in China?

What is GDP? Why is our GDP higher than theirs? Because, in general, we sell the finished products, they sell the commodity product. They sell the raw components, which allow our great corporations to make huge profits for their iconic brands.

IF a paint color, or a silicone sealer, or morphine, or penicillin, or Ford Escape, or iPhone, or Nike basketball shoe, requires a Chinese component to create an American finished product--

THEN the fact that we make more money than China does for our labor means very little.

If China shuts down, what great American Assembly lines shut down? I don't know the answer to this, and this is the only question that matters. The answer to this question can't be computed by calculation of GDP and general statements about size of our national phallus.

To answer this question will require going to each company and asking them directly, "how exposed are you?"

So far Apple and Proctor and Gamble have answered. "It's gonna hurt." Still waiting to hear from all the other great American companies.

"Procter & Gamble accesses 387 suppliers in China that ship more than 9,000 different materials to the company globally, affecting about 17,600 different finished product items. Each of these suppliers faces their own challenges in resuming operations, he said."

https://www.thestreet.com/investing/procter-gamble-material-impact-coronavirus

And here's what is really scary--our companies don't know either--not without substantial research. For example: when a component is purchased from India, who knows if the India assembly line shuts down without China.