The United States experienced a tumultuous supply chain crisis last year. Cargo ships were stranded off the coast of California for weeks, and many grocery stores couldn’t keep up with demand. Unfortunately, another supply chain crisis may be on the way.
According to The Guardian, the ongoing lockdown in Shanghai threatens to devastate the country’s economy and sever overstressed supply chains around the world. “There are increasing signs that China’s economy is slowing sharply because of the lockdowns. Activity in China’s services sector contracted at the steepest pace in two years in March as the surge in cases restricted mobility and weighed on demand.”
Because China is one of the United States’ most important trading partners, any disruption in Shanghai will eventually impact the United States. For example, many electronics components manufacturers are based in Shanghai and the surrounding region. And since some factories are being forced to shut down, shipments of goods to the United States will inevitably be delayed. “The key electronics suppliers to Apple, to Tesla, they’re all based there,” said Julie Gerdeman during an interview with The New York Times.
It’s important to remember that Shanghai is China’s most populous city and has the highest GDP of any Chinese city. So, any supply chain disruption that occurs in Shanghai will eventually create spillover effects throughout the rest of the world. Quoting an article published by CNN:
“Small businesses have been hit hard, with shops and restaurants being forced to shut down. Tesla, as well as many Chinese and Taiwanese manufacturers, are unclear about when they can restart their factories. Meanwhile, port delays are getting worse, and air freight rates are soaring, putting even more pressure on global trade.”
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