If governments successfully foster critical industries, their alliances will go from nice to necessary. Especially when tensions rise
Mr Armbrust is not alone in thinking supply chains warrant government intervention. The virus came with a flurry of export restrictions on medical products and a plunge in Chinese exports that raised doubts over whether its production clusters had exposed the world to excessive risk. The private sector promises to adapt. Jacob Wallenberg of the European Round Table for Industry reports more plan Bs in place than two years ago, as well as supply-chain issues appearing on boardroom agendas.
Some results are trickling in. A review by the European Commission identified 137 of 5,000 imported products with a dominant foreign supplier. Of those, only around 34 were hard to substitute by using other suppliers, representing just 0.6% ofimports by value. That sort of finding has prompted Simon Evenett of Global Trade Alert, a trade watchdog, to describe the problem of resilience as “a bit like a Russian doll—there’s less and less there.” Such exercises may understate the problem, however.
The third prong of governments’ quest for greater resilience involves fortifying domestic economies. This implies sharpening defensive trade tools. In May Katherine Tai, thetrade representative, called for new defensive tools to deal with prospective damage to American business from foreign competition rather than responding only after the fact.
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