Patrick T. Harker, President and Chief Executive Officer
Federal Reserve Bank of Philadelphia, on international trade:
Hacker notes:
“From the practical
side, there is the reality that many supply chains have become as intertwined
as global economies. Products whose provenance is a single country no longer
make up the entirety of trade. A tractor, for instance, may be made out of raw
materials shipped from Asia to South America for processing, then to North
America to make the frame, then back to South America for finishing touches,
then back to North America for sale, some domestically and some via the export
market.
While this is an
extensive chain of custody for any one product, it’s generally done for
efficiency’s sake, utilizing countries’ expertise and saving businesses money
while delivering quality. It makes sense and benefits all parties
involved.
But this kind of
global production is particularly sensitive to trade protection because every
time that tractor’s parts cross a border, they face a potential tariff.”