Geopolitical shifts are rejiggering top trade routes and capital flows worldwide. China’s exports are shifting away from Western countries while Mexico is gaining more market share of US imports. A de-globalization theme continues to reshape global trade, driven mainly by Washington’s economic policies to protect strategic industries and supply chains via reshoring.
Bloomberg data shows the number of times corporate executives mentioned “nearshoring,” “reshoring,” and “onshoring” in third-quarter earnings calls jumped an average of 216% year-over-year since the start of 2022.
Already, private companies have announced $516 billion of investments in domestic projects since President Biden took office, according to the latest figures from the White House. And this comes as former President Trump’s trade war kicked off the entire movement to ‘make manufacturing great again’ in the US.
“The trade war [with China] was the first big shock,” said Bloomberg Senior Geo-Economics Analyst Gerard DiPippo.
“But it was the pandemic that crystallized the fragility of the globalized supply chain, spurring companies to accelerate their nearshoring plans in earnest. Backlogged ports and high-profile shipping blockages in the all-important Suez and Panama canals illustrated the risks of relying on cheap production in Latin America and Asia, while advances in automation and rising freight costs have made it more economically attractive to move production back to the US,” Bloomberg wrote in a report.
A recent note via Goldman showed most of the manufacturing investment has been in semiconductor plants – thanks mainly to the CHIPS and Science Act to reshore the semiconductor supply chain in America.
The Biden administration can only take some of the credit and must remember the trend to reshore began with Trump. Also, “These trends were happening with or without government stimulus,” Emcor CEO Tony Guzzi told Bloomberg. He added, “The government stimulus solidifies demand or elongates demand.”