It’s understandable that countries around the world would limit exports of medical supplies that are in high demand.
In fact, 70 countries — including China and the U.S. — have reportedly instituted such policies.
But just like how hoarding toilet paper and hand sanitizer makes sense on an individual basis, it doesn’t work as a general policy. If half the people have all the hand sanitizer, more people will get sick, endangering even those who can keep squirting their hands clean.
Trade was being weaponized around the world even before this global health crisis. If protectionist reactions to COVID-19 solidifies resistance to global cooperation, it is going to make life harder for automakers, suppliers and, ultimately, dealers.
The World Trade Organization last week held a webcast to highlight the need for trade to facilitate an economic recovery.
The benefits of global trade are well established: Specialization leads to greater efficiency, lower prices benefit consumers everywhere, and global manufacturing footprints deter military destruction.
But my 20th-century notions of rational coexistence — cooperation and competition across the globe — are under attack from the left and the right.
In the current environment, EY is advising automotive clients to build up redundancy in their supply networks, rigorously seek offsetting cost savings and develop true end-to-end supply-chain visibility, Dave Sanders, the firm’s global trade leader for advanced manufacturing and mobility, told me last week.
Overlaying coronavirus-driven policies with the existing tide of economic nationalism, companies need a more sophisticated and rigorous approach than ever before.
“Trade will be there, and there will be opportunities — if you do it smarter than the other guy — to achieve superior value,” said Douglas Bell, EY’s global trade policy leader. “But it’s going to be different.”
What has been shown by this pandemic is the absolute need to be globally aware.
At first, it looked like China’s problem, then soon it seemed like an Asia crisis. But, of course, it soon became a global catastrophe. Similarly, the recovery won’t be uniform. Factories in Mexico or South Korea may not reopen at the same time as those in the U.S.
So if you’re a Chevy dealer in Phoenix, you’ll be wise to pay attention to what’s happening in Asia and in Alabama to be smart about what the Hyundai dealer down the street might do.