Free Trade’s Underlying Condition: Reuters

Individuals tend to panic and hoard during a crisis. The same is true for nations that must distribute protective equipment during the COVID-19 pandemic with globalization, reliable supply chains fall by the wayside. With demand running high for protective masks, the US president ordered 3M to supply US markets before Canada and Latin America.“The $80 billion company protests, pointing out that if everyone were to behave this way, all would end up worse off,” explains John Foley for Reuters, pointing out how other countries could rely on the same tactics. “The United States runs trade deficits in pharmaceuticals, and vaccines specifically.” US multinationals like 3M earn more than half their revenues from overseas and risk reputations by withholding supplies from long-time customers. “The ability to make goods where it’s cheapest and sell them where prices are best only works if customers feel they can rely on foreign supply when times get tough,” Foley writes. “Globalization can still work fine for products that aren’t life or death, and markets have short memories.” The Trump administration backed off from blocking shipments after reaching a deal with China and Canada. Economic nationalism impose higher costs for such equipment and does not compensate for lack of advance planning. – YaleGlobal