Trade Wars and Disrupted Global Commodity Chains

Abstract

The literatures on global commodity chains and global value chains rest on an unquestioned assumption: the continual expansion of globalization. The Trump Administration's trade wars challenged this foundational assumption and even today the new Biden regime also hints at the shift away from global supply chains. We find that the prior administration’s efforts caused continued disruption of long-established commodity chains in steel, aluminum, automobiles, and other manufactured products. Flows of raw materials, intermediate products and components, and finished goods now confront higher costs. Firms continue efforts to restructure commodity chains in ways that will require the disarticulation of some nodes and the creation of new nodes. We claim that these trade wars and breakdown of global commodity chains (GCCs) may in fact mark the start of the breakdown of the U.S.-led world order. This shift harkens the onset of a new era of economic and geopolitical conflict. A key question: has this disruption of old patterns and rise of new ones continued in the post-Trump era? Does the familiar pattern of globalization continue – or is competition, contestation and disarticulation leading to sectoral economic changes that drive larger patterns of economic ascent, dominance, and decline in the world economy?