**Introduction** Dependencies within global supply chains create risk when essential goods, components, or services are sourced from a small number of countries or firms and are difficult to replace. When disruptions occur — such as export restrictions, tariffs, transport bottlenecks, or political tensions — the effects can spread quickly across industries and borders. These risks affect both businesses, through higher costs and production delays, and countries, through weaker growth and reduced economic security[1][2]. **Where supply chain dependencies create risk** **1.** **Concentrated sourcing of key inputs** When a small number of suppliers dominate production or processing of important inputs, disruption in one location can halt activity across multiple industries. Higher import concentration in several strategic sectors has increased exposure to such upstream shocks[1]. This dynamic is especially visible in critical minerals. Processing and refining of lithium, cobalt, and rare earth elements are concentrated in a limited number of economies, making alternative sourcing difficult in the short term[3]. Where these inputs feed into clean energy equipment, batteries, or advanced manufacturing, disruption can slow production and increase costs. **2.** **Trade restrictions and policy changes** Concentration risk is amplified when access to inputs or markets depends on trade policy. Tariffs, export controls, and other restrictions can interrupt supply chains even when factories remain operational. Between October 2024 and May 2025, the stock of import restrictions increased, reflecting continued reliance on trade measures[4]. When restrictions accumulate or trading relationships shift abruptly, long-term output losses and higher volatility are more likely, particularly in economies deeply integrated into cross-border production networks[2]. For businesses, these changes raise compliance costs and complicate planning. For governments, they reduce predictability in trade and industrial policy. Local content requirements can further narrow sourcing options, limiting flexibility at precisely the moment firms need alternatives[5]. **3.** **Disruptions that cascade across industries** Global production networks are interconnected. A disruption in shipping routes, port operations, financial markets, or regulatory frameworks in one economy can affect suppliers and customers across many others. Uncertainty in trade and investment conditions has remained elevated, reinforcing the way shocks can spread across borders and sectors[2]. Efforts to diversify suppliers or relocate production can reduce exposure over time, but adjustment is costly. Firms often increase inventories, duplicate suppliers, or accept higher input costs during transition and countries may experience slower growth or higher prices as production networks reorganize. **Conclusion** Dependencies in global supply chains create risk through concentration, policy exposure, and interconnected production networks. When essential inputs are clustered in a few locations and trade conditions are unstable, disruptions spread quickly and are difficult to offset. Firms bear operational and financial costs, while countries face economic security challenges and macroeconomic strain. Reducing vulnerability depends on broader supplier diversification, clearer trade rules, and greater visibility across supply networks.
