The world discovered during Covid how disruptive supply chain interruptions can be. It only takes the lack of one tiny part (such as a rare-earth magnet) to shut down an automobile assembly line.
https://www.wsj.com/economy/trade/china-us-trade-war-supply-chains-2726c163?mod=hp_lead_pos2
Supply Chains Become New Battleground in the Global Trade War
U.S.-China talks on trade resemble arms-control negotiations, with export controls the key weapons in each side’s arsenal
By Jason Douglas, The Wall Street Journal, June 11, 2025
Key Points
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The U.S. and China are using export controls as new economic weapons in their trade war, affecting global supply chains.
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China controls key sectors, while the U.S. dominates in tech, leading to supply-chain vulnerabilities.
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Companies might need to split supply chains to navigate tariffs and trade conflicts.
SINGAPORE—A key lesson from the latest skirmish in the U.S.-China trade war: The era of weaponized supply chains has arrived.
Earlier this week, Washington and Beijing ended a standoff involving the most potent new tool in superpower statecraft—export controls. As part of a monthslong trade fight, the two sides choked off the supply of such exports as rare earths or semiconductor technology in a bid to gain an edge…
Following the latest skirmish, China agreed to resume exports of rare-earth magnets and critical minerals needed by U.S. companies—but only for six months…
In many essential sectors of the modern economy, China has the upper hand. The world’s second-largest economy accounts for around a third of global manufacturing output, giving it a potential chokehold on auto parts, basic ingredients for drugs, key parts of the electronics supply chain and a host of other industrial sectors. It is the world’s No. 1 exporter of machinery, ships, steel, ceramics, textiles and dozens of other goods, according to data from the International Trade Center, a U.N.-backed agency that promotes open trade.
The U.S. dominates fewer sectors—but its clout in advanced technology gives it an outsize advantage. … [end quote]
It would be a mistake to assume that the U.S. lead in advanced technology will be durable.
Starting a trade war with China is cutting off our nose to spite our face. There’s no way that the U.S. can rebuild our manufacturing base to compete with China given our disadvantages in labor costs and regulations. Even if we could it would take years…and our economy needs to import Chinese products NOW.
The uncertainty adds to the problem. What will tariffs be in 90 days? What will the supply chain be in 6 months?
Manufacturers and consumers may make or hold off decisions based on uncertainty which will distort the economy.
Wendy