If China failed (not very likely) production would just move to other nations. Everyone has their plan 'b' many have some parallel operations. Consider the case of global automotive manufacturers.
Trade disruption would be a highly chaotic occurrence -- but production would adapt and survive for the reason of demand.
Maybe India might be the beneficiary of this ???
- Capital always follows demand.
- Capital always seeks lower production costs.
- True labor costs are deceiving.
Domestic development of robots and automation will cause greater efficiency and productivity, and bottom line, in many cases, less jobs for lower paid workers in the developing world.
When a US (or any country's) business sets up overseas operating units they are usually incorporated, and domiciled, in that country. Only repatriated earnings into the US are taxable -- you cannot repatriate losses. Earnings and losses are taxed by the 'host' country of that incorporation under the host country's tax laws.
In other words, US owned Big Corp Ireland is taxed in Ireland under Irish laws. Any profits to the parent corporation (or investors) are in the form of repatriated earnings to the USA and those repatriated earnings are taxed as ordinary income under current US tax laws. They are talking about a tax holiday or reduced taxes on repatriated earnings. US corporations and other entities have trillions sitting in foreign banks. With that money leaving your country -- good luck