News / 'Fundamental remodelling of trade' in the US as globalisation fractures

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Government and industry have found themselves at a crossroads in which the latter must choose resilience over short-term cost if supply chains are to continue functioning amid deteriorating geopolitical relations.

Dr Walter Kemmsies, shipping advisor for The Kemmsies Group, told The Loadstar that the US and European governments were pushing a fundamental remodelling of trade in response to fracturing globalisation.

“Look at what the US has been doing, and is continuing to do – it is remaking the structure of its economy and remaking itself, with the ultimate aim being that it will build everything either at home or as close to home as possible,” he said.

“The present administration has made it very clear that it wants to make everything in the US, which means more than just computer chips and electric vehicles – which is all the press seems to have focused on. It wants [to make] medicine, medical equipment, anything it consumes.”

Under President Biden, the US has introduced a range of sweeping reforms, including the Inflation Reduction Act, which allows a government panel to determine critical industries entitled to federal funding to help with growth.

It had passed the Infrastructure Investment and Jobs Act in November 2021, allocating some $1.2trn for transport and infrastructure spending, with almost half set aside for new projects.

“This is all nothing less than a serious remodelling of the country, and it is likely to impact trade. You are seeing similar moves being made in Europe too, which means there are some big questions looming for shippers and their logistics partners,” said Dr Kemmsies.

“If you are international trade-oriented, and if you see the major economies stepping back from international trade, it is not going to look good for you. But  equally, they also need to be asking themselves whether they want it cheap, or they want it resilient.”

DHL has been one voice challenging the purported decline of globalisation, with its most recent Global Connectedness report suggesting that, despite a series of political crises, including wars in Europe and the Middle East, its globalisation index remains at a near record high.

Measuring impact from global and political events and trends on trade flows, people, and capital across more than 180 countries, the report noted that in spite of the diminishing links between China and the US, the two ranked among the most connected countries in the world.

And while it suggested regionalisation was declining globally, it noted that North America was seeing a notable trend towards near-shoring, echoing Dr Kemmsies’ assertion that the US was looking to “bring it all back home”.