More turmoil ahead for global supply chains

Global supply chains are facing a new threat: congestion at Singapore’s container port. June Yoon reports that the world’s largest transshipment hub is facing the worst congestion since the pandemic, and that it has started to spill over into neighboring ports, posing a major risk for global supply chains.

Andrea Dugo points to China’s President Xi’s May visit to Europe and the new European Union tariffs on EVs as indication that EU-China relations are worsening. Since President Xi’s visit, the Commission announced its EV tariffs and Beijing has continued to threaten extensive retaliation. On a practical note, Chinese companies have been seeking to invest in manufacturing sites in Europe, notably Hungary, to circumvent the new tariffs. This week, BYD announced it will invest in Turkey for this purpose, reports the Financial Times.

Amidst ongoing geopolitical tension related to the Ukraine war, Narendra Modi visited Moscow this week. Foreign Policy reported that, during the visit, Modi and Putin pledged to increase annual bilateral trade to $100 billion by 2030, up from $65 billion at present.

And, finally, accelerated by the Ukraine conflict, the EU Commission may be poised to take on more responsibility for defense during a second von der Leyen term, writes Bruegel. As per Politico, a potential defense commissioner would likely be tasked with overseeing industrial coordination in relation to defense innovation, manufacturing, and procurement, and possibly the joint European space program.

In the "Trade-offs", a series by the Council on Foreign Relations, James Wallar explores the choices faced by economic policymakers, offering a broad analysis of US trade policy and highlighting areas that are not working effectively.

Mentioned publications

HF sponsored access Singapore port congestion threatens to gum up global trade – June Yoon, Financial Times, July 9, 2024
US tariffs on Chinese products may have contributed to the congestion, causing companies to rush to secure needed inputs and products before those tariffs fully take effect.
EU-China relations – a health report after Xi’s visit and new EV tariffs – Andrea Dugo, European Center for International Political Economy (ECIPE), July 2024.
The change of pace most likely stems from the consideration that the EU cannot afford to engage in a full-fledged trade war with China.
HF sponsored access BYD agrees $1bn deal to build electric vehicle plant in Turkey – Adam Samson and Arjun Neil Alim, Financial Times, July 8, 2024
Analysts point to the investment as evidence that Chinese automakers are looking to adapt their strategies to avoid protectionist measures.
Russia Is a Strategic Spoiler in the Indo-Pacific – Derek Grossman, Foreign Policy, July 9, 2024
Other than being a major arms and oil supplier, Moscow has little of concrete substance to offer Indo-Pacific nations.
What role do imports play in European defence? – Juan Mejino Lopez and Guntram B. Wolff, Bruegel, July 4, 2024
The EU wants to reduce reliance on imported defense equipment, but the reliance seems to be overstated.
EU defense commissioner: The prestigious-sounding job you really don’t want – Jacopo Barigazzi, Joshua Posaner, and Laura Kayali, Politico, June 4, 2024
This newly proposed role in the next Commission sounds like it should be one of the highest-profile gigs in Brussels.
The Unbearable Lightness of US Trade Policy – James Wallar, Council on Foreign Relations, July 2, 2024
The administration might look tough domestically—protection and tariffs are politically popular among voters—but it has diminished US global leadership on trade policy and its effectiveness in promoting permanent change—the unbearable lightness of US trade policy.