Supply chains will dominate the US trade agenda

Significance

The administration aims to enhance supply chain resilience and climate sustainability through industrial policies and regional negotiations that prioritise governance and trade facilitation. The approach, controversial for its economic nationalist undertones and omission of market access, is compounding a shift in bureaucratic power from the US Trade Representative (USTR) to the Department of Commerce.

Impacts

• Demand for supply chain resilience, commodities and critical minerals may boost prospects for Western Hemisphere developing nations.
• US firms with operations in China will localise their China supply; they are cutting investment due to the lockdowns and US policy reforms.
• World recession in 2023 would ease supply chain strains but Fed and ECB rate hikes cannot directly solve production bottlenecks.