Number of the Day
Global Trade Plummets, by the Numbers
The pandemic has made trade barriers go up even faster
12.5%: That’s how much global trade fell in the second quarter of 2020, compared to the first quarter, the largest drop since records began in 2000, according to the CPB Netherlands Bureau for Economic Policy Analysis. The pandemic-induced crash in demand, coupled with disruptions to cargo transportation, have caused global trade to dip below the levels seen during the Great Recession.
It may be a long time before global trade returns to pre-pandemic levels, especially if world leaders, burned by how easily global supply chains failed during the pandemic, double down on a strategy of domestic production. Already, Japan is paying its companies to shift production out of China, the French president has pushed for greater economic independence, and the Indian prime minister launched a campaign of national self-reliance, eagerly embraced by some of the nation’s major industrialists. Just earlier this month, President Trump signed an executive order calling on federal agencies to purchase drugs and medical supplies from the U.S. Companies may find domestic production hard to achieve, as even an American manufacturer like 3M remains reliant on global supply chains to source materials for its N95 masks.
