change in the American approach, but to more co-ordinated confrontation, rather than
less overall. The European Union has already started work to bulk up its defences,
including “redressive measures” in areas where it finds that foreign (read: Chinese)
subsidies are distorting markets.
Other sources of strife will include American and European pledges to apply “border
adjustments” for carbon-intensive imports, as well as subsidies intended to support
covid-stricken businesses, which fuel accusations that the playing field is not level.
Economic nationalists accused of breaking international trade rules will argue that they
are simply putting their own citizens first, as Donald Trump did during the early days of
the pandemic.
The firms that organise many of the world’s supply chains will happily accept handouts,
or restrictions on their competition. But they will also argue that they can reshape
globalisation on their own. Even before the Sino-American trade war, rising labour costs
in China were pushing production elsewhere, while export supply chains shortened.
Those calling for trade peace will say supply chains are too complex to be managed by
blunt policy directives. Intervention could even make supply chains less resilient, by
reducing the ability to produce more in a crisis. Firms could move to a more diversified
form of globalisation, in which manufacturers become less reliant on China to serve
international markets, and build more redundancy into their supply chains—provided
government interventions do not prevent them from doing so.
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