U.S. vs China: Disrupting Global Supply Chains
Trade Wars
China is the biggest net exporter in the entire world meaning that they export far more than they import. The U.S however is the biggest net importer in the world meaning they take in far more imports than exports (China a big chunk of U.S imports). In 2018 the U.S realized the huge gap in trade deficit and debt they owe to China also as well as a sort of dependency on these imported goods.
Due to that Donald Trump imposed tariffs specifically targeting Chinese goods and soon China responded with tariffs equaling the presidents and thus the Trade Wars started. Since then there have been multiple more increased tariffs such to a point that there is a tariff on all Chinese or U.S imports between the two countries. They decided to call a “truce” in 2020 called phase one where China committed to increasing its purchases of U.S. goods and services, and the U.S. agreed to reduce some tariffs. Despite this multiple tariffs still remain in place and tensions are still high with Trump in the recent election raising tariffs on Chinese imports by a significant amount as well as all foreign vehicles which is one of China's biggest exports.This can't all be seen as a bad thing as it not only aims to reduce dependency. Not only that , but it encourages U.S businesses to buy products domestically which boosts the economy and provides more job opportunities for the country.
Covid
The Covid 19 Pandemic specifically underlined the exposed reliance for raw materials and manufacturing in China. Many countries relied on these industries in automotive and electronics causing a significant global shortage on these goods. With the Pandemic at an all time high in China there were mass manufacturing shutdowns showing the weakness in relying solely on one singular source as a supplier.
In response to these vulnerabilities, there is a growing trend in the U.S. towards reshoring (bringing manufacturing back to the U.S.) and nearshoring (relocating production to nearby countries). Aiming to reduce dependency and increase security for the supply chain in case a pandemic or shortage occurs again. This is why businesses are more focused are
How it affects supply chains globally
These tariffs for both countries led to increased prices for businesses all across the world as well. By increasing prices for imports it also caused different businesses to consider a variety of supply chains making a somewhat global change in supply chains. Countries that are a part of the Chinese-U.S supply chain also felt a ripple. For example if Germany supplied parts to China for automobiles then that also affects their production and supply chain coming to a halt. The trade tensions prompted countries to reassess their strategic alliances and trade partnerships. This led to new trade agreements and partnerships aimed at reducing reliance on the U.S. or China and diversifying economic relationships. The U.S government has always sought to showcase economic and technological supremacy, this situation being no different. America continues to maintain its aggressive stance and China shows no sign of backing down.
Geopolitical tensions
Relations and trade tensions between the U.S. and China have persisted for a long time, impacting global supply chains. Tariffs, trade barriers, and geopolitical uncertainties continue to influence the flow of goods and the strategies businesses use to manage their supply chains. Regional Trade Agreements: In response to geopolitical tensions, countries are forming and strengthening regional trade agreements, such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership , to secure trade and supply chains within specific regions.
-Chart: Which Countries Are Net Exporters & Importers? | Statista
-Global supply chains and the US-China trade war | Deloitte Insights
-Trade Titans: The Impact of the US-China Trade War on Global Economics (cornell.edu)