Will fallout from the Chinese balloon affect trade?

In this photo provided by Chad Fish, the remnants of a large balloon drift above the Atlantic Ocean, just off the coast of South Carolina, with a fighter jet and its contrail seen below it, Saturday, Feb. 4, 2023. The downing of the suspected Chinese spy balloon by a missile from an F-22 fighter jet created a spectacle over one of the state’s tourism hubs and drew crowds reacting with a mixture of bewildered gazing, distress and cheering. (Chad Fish via AP)

(NewsNation) — While there was already tension between China and the United States, the U.S.’ shooting down of a suspected Chinese spy balloon off the South Carolina coast earlier this month has only heightened it.

Now, major trade organizations are telling members to stop relying so heavily on China in case rising tensions sever supply chains.

The National Retail Federation, the American Footwear and Apparel Association and the Council of Supply Chain Management Professionals all said to CNBC that they have heard new concerns from their member companies.

“The ongoing tensions with the U.S.-China trade relationship continue to highlight the need for supply chain diversification,” Jon Gold, vice president of supply chain and customs policy of the National Retail Federation, said, per CNBC. “From the tariffs to COVID-19 to additional challenges, retailers are looking for opportunities to diversify their sourcing to ensure they have resilient supply chains to meet consumer needs.”

Economic adviser Clete Willems told NewsNation’s Mitch Carr on “Morning in America” that it’s still a little too early to tell how this incident in and of itself will impact the U.S. and China’s trade relationship.

Still, though, in the long term, this incident and sanctions between the two countries are likely “going to add more fuel to the fire to try to de-link supply chains from China,” Willems said.

“I think that you are going to see some actions in that in that regard,” he added.

Watch the full interview with economic adviser Clete Willems in the video above.


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