One of the things that this crisis has taught us, sir, is that we are dangerously overdependent on a global supply chain for our medicines, like penicillin; our medical supplies, like masks; and our medical equipment, like ventilators.” Thus, did Peter Navarro, an influential adviser of US president Donald Trump, draw lessons from the Covid-19 crisis for American trade policy.
This view is seductive to protectionists. But it is wrong. The lesson from the crisis is to be better prepared. Self-sufficiency in “essential products” would not be a good way to achieve this. On the contrary, it would be a costly error.
Attacks on cross-border supply chains should not be viewed in isolation. The latest forecasts from the World Trade Organization suggest that the collapse in trade now could be far bigger than in response to the 2008 financial crisis. It would be very damaging if policymakers responded to the steep decline in their countries’ exports by curbing imports. Yet that is what forced “reshoring” of supply chains means. It would be yet another assault on liberal trade. (See charts.)