Decoupling destroys US industries
Gilbert et. al 20 – Michael McAdoo, Fang Ruan, Raj Varadarajan, Antonio Varas, and Gary Wang, Marc Gilbert is a core member of the Industrial Goods and Consumer practices at Boston Consulting Group and a leader in BCG’s Global Advantage and Operations practices. He leads the firm's work in geopolitics and trade impact within the Global Advantage practice. “What’s at Stake If the US and China Really Decouple”, https://www.bcg.com/publications/2020/high-stakes-of-decoupling-us-and-china//HarrisC
Caught in the middle are US and Chinese companies with around $550 billion in revenues at stake in each other’s markets. In many cases, these enterprises are also intimately interconnected through industrial supply chains. Unwinding commercial ties that took decades to build would be costly and pose significant risk to both US and Chinese companies. But our analysis suggests that US companies, because of their strong push over the years to source and sell in China, collectively have far more to lose in the near term—with respect to both revenue and access to critical components and materials.
US companies have around $400 billion of revenue at risk in China. (See Exhibit 1.) While that represents only 5% of their total revenues, its loss would translate into around 15% of their market capitalization, or about $2.5 trillion in value.2 We found that seven major US industrial sectors—consumer electronics, motor vehicles and parts, aerospace, medical supplies, medical equipment, machinery, and enterprise hardware—derive 7% to 16% of their global revenue from China.3 Overall, Chinese firms have three to five times less revenue exposure to the US market; only the consumer electronics, enterprise electronics, and machinery sectors rely on the US for at least 7% of revenue.