Trumponomics is winning in Washington and global supply chains feel the pain
Sun Xi and Faisal Ahmed say that the course the US-China trade dispute takes will be unpredictable, but we can count on the impact on global production networks to be negative. Some are already scrambling to adjust
Today, more than 60 per cent of world trade happens in intermediate goods, with China being a major trader interlinking the supply chains of large multinationals and other firms. China has enjoyed a 10 per cent growth rate over the past three decades, and this was possible largely due to the increasing participation of its small and medium-sized enterprises in global value chains. In fact, most export-led economies are dependent on imports – of raw materials, parts, components and so on.
The escalating trade dispute will have repercussions on the multilateral trading system. It can affect export-led economies in several ways. Not only will tariffs make their products costlier in an importing country, but there will also be costs associated with supply chain disruptions, spillover effect on partner countries and sectors, plus impact on investment inflows.
