Mary E. Lovely on what’s really going on with global supply chains

Global supply chains have not significantly decoupled from China despite years of US tariffs, as evidenced by persistent reliance on Chinese intermediate inputs routed through third countries like Vietnam and Mexico. Research by Mary Lovely and Christine Wan demonstrates that while direct bilateral trade has dropped, the "value-added" content of Chinese goods in US imports has decreased by only two percentage points. These findings challenge the efficacy of broad-based tariffs, which often function as blunt instruments that increase costs for American firms rather than fostering true economic security. Furthermore, informal Agreements on Reciprocal Trade struggle to enforce policy alignment, as they lack legislative backing and ignore the deep integration of Asian production networks. Effective economic security requires a strategic, targeted approach to critical sectors rather than the current reliance on costly, broad-based trade barriers that disproportionately impact domestic consumers.