FAIRFAX, VIRGINIA – The global supply chain, already under pressure from U.S. President Donald Trump’s trade war, now faces further strain from the COVID-19 coronavirus. And while cross-national supply chains are more robust than they may appear, if they fail they will do so suddenly and without much warning.
Consider the supply chain of the Apple iPhone, which stretches across dozens of companies and several continents. Such complex cross-national supply chains generate relatively high profits, giving them a kind of immunity to small disruptions. If there is an unexpected tax, tariff or exchange movement, the supply chain can generally swallow the costs and move on. Profits will be lower within the supply chain, but production will continue, as it is too lucrative to simply shut everything down.