That Cake Is Already Baked,' Says Bill Ackman, Warning U.S.-China Tariff War Is Driving Companies Out Of China For Good

The economic friction between the U.S. and China just reached a boiling point. Last month, the U.S. slapped a 145% tariff on Chinese imports, and China has responded with a 125% tariff on American goods. 

Billionaire hedge fund manager Bill Ackman, CEO of Pershing Square Capital Management, warned that prolonged trade tensions are pushing global companies to shift supply chains away from China—permanently. 

"That cake is already baked," he wrote April 26 on X, referring to the irreversible decisions companies are making to exit China.

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Tariffs Stack Up And Ships Slow Down

The tit-for-tat tariffs were detailed in an April overview by China Briefing, a publication by the consulting firm Dezan Shira & Associates, highlighting the mounting cost burdens for businesses on both sides of the Pacific. While President Donald Trump issued an Executive Order announcing a 90-day pause on future reciprocal tariffs on April 9, the relief excludes China.

Ackman shared on the same post that "tariffs are very damaging in the short term to companies that rely on China for a large percentage of their goods." He pushed for both countries to lower tariffs to 10%–20%, adding, "The only thing stopping the reduction in tariffs to a more sensible level is the fear on the part of both countries’ leadership of looking weak."

Trade volumes are already feeling the pinch. Gene Seroka, executive director of the Port of Los Angeles, told CNBC he expects a 35% drop in container arrivals from China this spring compared to 2024 levels.

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Global Supply Chains Find New Homes

As companies scramble to minimize exposure, Ackman argued the longer the tariffs persist, "the more rapidly every company that has a supply chain based in China relocates it." He pointed to India, Vietnam, Mexico, and the U.S. as new manufacturing hubs for both U.S. and non-U.S. firms.

Data from Rhodium Group shows a surge in foreign direct investment into Southeast Asia and Mexico. Ironically, Chinese companies are driving much of this growth, expanding their own operations abroad as Western firms pull back.

Still, the transition hasn't been seamless. A FreightWaves analysis in March found that cultural barriers, productivity hurdles, and labor regulations have made scaling operations in Vietnam and India challenging. In Mexico, manufacturers are facing worker shortages, which complicates relocation plans.

Tariffs Ripple Through Retail

Retailers relying on Chinese manufacturing are some of the hardest hit. Rick Woldenberg, CEO of educational toy maker Learning Resources, told the Associated Press that his company's tariff bill could skyrocket from $2.3 million to over $100 million this year. He said the tariff hikes feel like "the end of days."

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