When then-Gov. Nikki Haley of South Carolina went to a ribbon-cutting ceremony for Kent International in 2014, the bicycle company had grand plans for expansion at its assembly plant to make its products in the United States.

“Manufacturing, it’s never as easy as it looks and people kind of laughed at us, but won’t be laughing very much longer,” Kent International Chairman and CEO Arnold Kamler said. “We are not reinventing the wheel; we just have a really talented bunch of workers and managers.“

President Donald Trump had promised that his steep tariffs on Chinese goods would help bring jobs back to the U.S. But five years later, paradoxically, it is the very tariffs that Trump has imposed that have kept that plant in Manning, S.C., from expanding, Kamler said in an interview.

Firms are indeed moving out of China but are not flocking to the United States, undermining the central promise of Trump’s trade war. Cheaper labor markets in Southeast Asia are the ones benefiting the most amid the trade war that has ratcheted up duties on Chinese goods.

In fact, the administration’s actions have prompted Kent International to still rely on its joint venture partner, Shanghai General Sports, to supply more of its bicycles. For its part, Shanghai General is planning to build a factory on a plot of land in Cambodia. By the end of year, 40,000 square feet of production capacity will be complete.

Kamler estimates that 30 percent of the company’s annual production of 3 million bicycles will come from Cambodia, at the expense of China.

The tariffs are also taking a toll on Kent International’s ambitions to bring jobs to the U.S. The company needs steel tubes as components in the welding assembly line, which currently can only be bought at a reasonable price from foreign suppliers.

The administration’s tariffs on steel and aluminum imports — as well as the threat of new tariffs on the majority of the components used in bicycle production — has meant that additional phases of bringing jobs to the U.S. have yet to happen.

The latest U.S. economic trends aren’t helping efforts. U.S. economic growth has slowed this year and the 3 percent growth Trump promised last year was revised down to almost 2.5 percent.

Manufacturing job trends are also cooling. The latest U.S. jobs report showed manufacturing employment rose by an average of 8,000 per month so far in 2019, compared with an increase of 22,000 jobs per month in the sector in 2018.

Across-the-board tariffs on all Chinese imports could create more than 1 million U.S. jobs in five years, contends the Coalition for a Prosperous America, a major backer of Trump’s tariffs. The reality, however, is other nations with lower wages are the ones benefiting from the president’s strategy.

“The majority of jobs are going to other countries,” said Jeff Ferry, chief economist for the coalition, which has advocated a complete decoupling from the Chinese economy to benefit the U.S.

The group‘s study found only a small gain in production returning to the U.S. the first year of a blanket tariff, representing only about 0.2 percent of the more than $500 billion worth of imports from China. By year 5 though, that number would increase to 13 percent compared to the value of last year’s imports from China, he said.

For his part, Trump pledged that his strategy to escalate the trade war against China would create jobs in the U.S. in the long term.

“Tariffs are a great negotiating tool, a great revenue producer and, most importantly, a powerful way to get companies to come to the USA and to get companies that have left us for other lands to COME BACK HOME,” Trump tweetedlast month.

Acecdotal evidence, not hard numbers.

There have been some prominent announcements from companies trumpeting that they have “reshored,” or brought jobs back to the United States.

Stanley Black & Decker said this year it would move production of its Craftsman line of tools, which it acquired from Sears, from China to Texas where it would add 500 jobs. High-end furniture seller Restoration Hardware said in a recent earnings report that tariffs were spurring it to bring some manufacturing to the U.S.

The U.S. Commerce Department published this year a “case study” on reinvesting in the U.S., highlighting the experiences of six companies moving production to America. The report makes the case “that anecdotal evidence of hundreds of reshoring cases is very real,” but it also admits that tariffs are a “challenge” for companies wanting to move production to the U.S.

Half of the companies profiled by the Commerce Department highlight the harm of tariffs on investment decisions.

Quality Electrodynamics, an Ohio-based company that designs and produces parts for medical devices, “recommended that the U.S. government could promote reshoring and expansion in the United States by revising U.S. tariffs on Chinese components in a way that does not disadvantage U.S. companies.”

Those working to find ways to increase reshoring say the tariffs are making it harder for companies to make decisions on where, or even whether, to add capacity.

Harry Moser, president of the nonprofit Reshoring Initiative, said he agrees 100 percent with the goals of Trump’s tariffs, but said they have had a “modest net negative” effect on jobs coming back to the U.S. as companies look elsewhere to relocate production.

Based on the Reshoring Initiative’s own study, 2018 was a banner year for the return of jobs to the U.S., but that progress dropped off in 2019. Already, $250 billion worth of imports are subject to a 25 percent tariff, and Trump has threatened to slap duties on almost all that the U.S. brings in from China.

Trump has announced that he would hit an estimated $112 billion in imports from China with a 10 percent as of Sept. 1, while another $160 billion subject to the duty as of Dec. 15.

“Clearly Trump caused work to come here more by the things he did on taxes than by pounding on the table with tariffs,” Moser said. “The uncertainty caused by the tariffs are hurting reshoring and foreign direct investment.”

Trump’s trade chief, U.S. Trade Representative Robert Lighthizer, acknowledged recently that tariffs were diverting some production to the U.S. but also to other countries.

“The imposition of tariffs can have many effects, including modifications to supply chains,” he wrote in a response to a written questions from Congress on whether tariffs are benefiting producers in other countries.

“I have closely followed reports of manufacturing coming back to the United States from China or going to third countries in some instances,” he said.

Sebastien Breteau, the CEO of Hong Kong-based supply chain inspection company Qima, said the data his firm collects supports the theory that neither China nor the U.S. is winning the trade war.

The company, which has 6,000 clients worldwide, has seen a 13 percent drop for China-based inspections from U.S. companies.

Meanwhile, inspections for U.S. clients increased 21 percent in Vietnam, 25 percent in Indonesia and 15 percent in Cambodia. Mexico inspections for U.S. clients jumped by a staggering 119 percent in the first six months of 2019.

“There is a clear sign that in the trade war between the U.S. and China, the winner is not going to be the U.S. and it’s not going to be China,” he said. The winners are “going to be Vietnam, Indonesia, Cambodia and very likely Mexico and Bangladesh.”

The Qima data is supported by a recent report from consulting firm AT Kearney, which found that imports from low-cost Asian countries in 2019 outpaced U.S. manufacturing output.

A report by the investment firm China International Capital Corporation released last month estimated that across eight manufacturing sub-sectors in China, the first two batches of tariffs from the United States would likely result in 1.5 million job losses in China. The authors said that looking across the whole manufacturing sector, “this estimate may be low.”

However, there is little evidence to suggest that many of these jobs are flocking to the United States.

George Whittier, CEO of Morey, a Chicago-based custom electronics manufacturer, said his company still relies on imported parts to make GPS tracking devices and controllers for vehicles. Most of those components imported from China are subject to tariffs, but the finished products are not. The result is more time spent haggling over costs with existing customers rather than expanding production and jobs.

Whittier also questioned whether the U.S. labor pool could absorb a major increase in manufacturing. He said he has 15 positions open that he has been unable to fill even after raising the offered salaries twice.

“If there was this big boom of manufacturing coming back from China into the U.S., I gotta be honest, I have no idea where the workers are going to come from,” he said.

Kamler, of Kent International, said previous discussions with the Trump administration had been frustrating because of a perspective that only goods made from “start-to-finish in the U.S.” count as “real” domestic manufacturing. But he added that recent talks with the Commerce Department had been more fruitful.

Kamler has formed a coalition of 12 American companies in an attempt to bring an entire supply chain cluster back to the United States. If the alliance can prove that it’s assembling entire bicycles in the United States, it would “be able to import all the component parts for five years, duty free,” Kamler said.

Still, he said he was told the alliance would only get the tariffs eliminated if it could prove that it could increase U.S. bicycle assembly from 600,000 annually to 4 or 5 million. Kamler said the industry would ultimately have to seek permanent relief from tariffs through legislation, which he said is in the early stages of being developed.

“These things don’t happen so fast, but this is a long-term play and this is actually my hope and part of my legacy that I’m hoping to leave, that I can help bring back the American bike industry,” he said.

Counterfeiting, not tariffs, prompt some moves

For other companies, the threat of intellectual property, or I.P., theft and not tariffs has driven decisions to relocate production to the U.S.

Isaac Larian is the chief executive officer of MGA Entertainment, the world’s largest privately owned toy company. Last year, one of his company’s brands, Little Tikes, reshored production of fashion accessories for its line of L.O.L. Surprise! Dolls to an existing plant in Hudson, Ohio, in a bid to avoid fake versions of its products from being sold to consumers.

“The biggest problem we face in China is the theft of I.P. There are over 200 factories in China that make L.O.L. Surprise! counterfeit products and very little can be done about it,” Larian said. “These counterfeit products are unsafe for children.”

He said MGA tested moving one item’s production to the U.S. and found it was successful. Now, it plans to move more accessories, especially because toys made in China are among the items subject to a 10 percent tariff as of Dec. 15.

“It will definitely affect business due to lower sales, and we are looking at options” to move more manufacturing out of China, he said, adding that “it is too late for this year.”

Another toy seller, Unit Bricks, examined moving production to the U.S. by pricing out the plastic elements of its production as well as packaging. But the company decided it was unaffordable at this stage because profit margins on toy sales are too thin to justify the costs of relocating production to the U.S.

“Everything is about margins,” said Timothy Stuart, the owner of the educational toy maker. “The issue with the U.S. is that labor intensive items become too expensive.”

“All production is in China for us: plastic, wood, packaging. Industry follows labor, and America can’t afford cheap labor,” said Stuart.

With the threat of a new tariffs looming, Stuart said that his business could absorb a 10 percent levy, but should it rise to 25 percent, “we would have zero choice at that point” but to leave China.

“Frankly, I still have hope that the 10 percent won’t hit, but we are prepared for it and have already spoken to customers. They’ve increased the quantities of their orders, so that helps,” said Stuart.

But should things escalate, the U.S. and Poland are both active options but due to the higher cost, “the U.S. is the last resort.”

This article was originally published at Politico on August 24, 2019. Reprinted with permission.