President Donald Trump repeatedly asserts that “thousands” of companies are scurrying to flee China because of his tariffs. But Asia and trade experts say he is exaggerating data for political gain.

As the president tells it, U.S. and other firms have either moved or will move their production operations and supply chains off Chinese soil because he has slapped $250 billion worth of import duties on Chinese products. As recently as last Tuesday, Trump threatened further tariffs of $325 billion on goods from the Asian superpower. Experts, however, say the situation is not that black and white.

This now-familiar assertion comes up during official White House events, raucous campaign rallies, brief Q&A sessions with reporters, interviews and on Twitter. He did the latter last week in a series of tweets that began by appearing to take credit for the American rival’s economic sluggishness.

“China’s 2nd Quarter growth is the slowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving,” Trump tweeted one early morning. “This is why China wants to make a deal…….with the U.S.”

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He made a similar assertion as he stumped for his proposed trade pact with Canada and Mexico during remarks in Milwaukee earlier this month, a stop linked to his attempts to again secure Wisconsin’s 10 Electoral College votes. 

And a May 13 tweet brought this threat as trade talks between the economic giants stalled: “Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!”

…completely avoided if you buy from a non-Tariffed Country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs. Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!…

— Donald J. Trump (@realDonaldTrump) May 13, 2019

‘A mixed bag’

Trump is prone to exaggeration, hyperbole and false statements. The president has uttered or tweeted 10,796 “false or misleading” statements since taking office, according The Washington Post’s Fact Checker, last updated on June 7.

Experts say Trump is at it again with his talk of a corporate exodus from China.

“The reality is much more of a mixed bag,” said Ryan Hass, director for China, Taiwan and Mongolia on President Barack Obama’s National Security Council staff from 2013 to 2017. “There are companies that are leaving. There also are companies that are entering the Chinese market. In fact, I talked to the head of an industry association in China who said that 97 percent of their companies are profitable in China, and have no plans to leave.”

S&P Global’s Panjiva Inc., a New York-based firm that tracks global trade activity and data, also paints a more nuanced picture than does the Trump, the first American chief executive since William McKinley to favor tariffs.

In a July 15 note that covered the first half of the year, Panjiva called Target Corp. “one of the most exposed retailers to Chinese manufacturing,” but said it “did not make major changes to [its] sourcing strategy, centered mostly in China.” The company only slowed imports from China by 0.7 percent compared to the first half of 2018, while increasing sourcing from other countries by 12.8 percent in the same year-on-year comparison.

Walmart, one of Target’s top competitors, increased its sea-based Chinese imports by 12.4 percent, while substantially increasing seaborne imports from India (268.7 percent year-over-year) and hiking its Vietnamese imports by 19.9 percent, according to the research firm.

Dollar General and Dollar Tree both slowed their business in China, India and Vietnam while increasing business with other countries; Home Depot “showed a mixed strategy” with a “slight bump” upward in its Chinese imports (2.9 percent) and a bigger spike from Vietnam (55.1 percent), while decreasing its business with other countries, according to Panjiva.

Electronics retailer Best Buy acquire more items from China in the first half of 2019, as did toy manufacturers Hasbro and Mattel, according to the firm.

Josh Green, co-founder of Panjiva and now with S&P Global Market Intelligence, said Trump’s tariffs are influencing some industry decisions — but not all of them.

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“It is certainly fair to say that tariffs are encouraging companies to look beyond China for manufacturing,” Green said. “However, most companies were in the process of diversifying prior to the trade war as a result of rising wage rates in China. In effect, the trade war has politically accelerated what was eventually economically inevitable.”

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It’s all about the base

Panjiva’s data suggests the president may be exaggerating yet another matter for political gain at home as he tries to both keep his conservative base fired up with a perceived tough stance against Beijing and keep enough blue-collar crossover voters in key Rust Belt manufacturing states.

“I think what is happening is there is no database of what companies are in China and what companies are leaving — it’s pretty anecdotal,” said Hass, now with the Brookings Institution. “What you can do is build a story by collecting any data points in the direction you want. My guess is people around Trump know what he wants the right answer to be, and they’re finding the evidence he wants to believe and get out there.”

Trump’s early 2020 campaign tour, which has seen his roll out a bare-knuckle reelection strategy, has already taken him to manufacturing states like Michigan, Wisconsin and Pennsylvania. Last week, he rallied the party faithful in North Carolina, a state that was hard hit when textile and furniture companies moved their production operations overseas — including to places like China.

Notably, recent polling has shown Trump trailing former Vice President Joe Biden and several other leading Democratic White House hopefuls in hypothetical one-on-one races in those key states.

“One of the biggest threats to Donald Trump’s reelection is the lagging economy in the industrial Midwest states like Ohio, Michigan and Wisconsin that he needs to win again in 2020,” said Brad Bannon, a Democratic strategist.

“Trump’s base will believe anything he says if he repeats it often enough. But the blue-collar voters who supported Trump are swing voters not part of the base,” he added. “If they are still struggling financially next Fall, the president loses them and loses the Electoral College and a second term in the White House.”