Globalization Is Not Dead Yet, Where's The Reshoring?

Trump's trade wars, tariffs, and COVID were supposed to kill global trade. Fortunately, that didn't happen.

Alive and Kicking

Please consider Globalization is Alive and Kicking in Trade’s Big 2020 Comeback.

The COVID-19 pandemic was supposed to put the final nail in the coffin of globalization and prompt a retreat into a new era of protectionism. Instead, some are now calling the crisis the Great Accelerator.

 Companies like Samsonite International SA to Walgreens Boots Alliance Inc. are reinforcing their sources of production abroad instead of retreating from global markets.

“What we have learned is supply chains are flexible and adaptable,” World Trade Organization Chief Economist Robert Koopman said in an interview. “Trade is part of the solution.”

Natalie Blyth, the global head of trade financing at HSBC Holdings Plc, isn’t seeing companies recoil supply chains to their domestic markets to protect against new risks. On the contrary. “I’ve tried to find it -- I can’t find the reshoring. We can find reshaping,” Blyth said. “The super efficient, finely tuned just-in-time inventory model failed in phase one of COVID. But it’s not reshoring that’s the solution to that -- it is diversification.”

Reshoring Efforts Fail

The Bloomberg article above mentioned luggage maker Samsonite, hard hit by Trump's tariffs then COVID.

Samsonite (SMSEY) used to get 95% of its product from China. Now it's only 35%.

Samsonite’s supply chain now extends to Thailand, Vietnam and Cambodia. “This team has really done an amazing job of shifting and the quality of what we’re getting outside of China is as good as ever,” CEO Kyle Francis Gendreau said.

Trade Shift to Vietnam

I discussed such shifts just yesterday. 

US Balance of Trade Top Trading Partners 2020-10

2018 to 2019 Synopsis

  • The trade deficit in goods with China improved from $418.95 billion to $345.2 billion. That's an improvement of $73.75 billion.
  • The trade deficit with Mexico, Taiwan, and Vietnam rose by $47.07 billion.
  • The overall trade deficit (17 nation total including China) rose by $15.72 billion.
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