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How might the US-China tech war impact the global supply chains?

 

The ongoing technology rivalry between the US and China could profoundly impact global supply chains in several ways:

- Decoupling - US bans on selling certain technology to Chinese firms will force supply chains to split into distinct US/China spheres. This bifurcation disrupts current integration.

- Uncertainty - The unpredictable regulatory environment may encourage companies to diversify operations across more countries, leading to inefficiencies.

- Costs - Duplicate manufacturing capacity and reduced economies of scale as US and China multiply sites in a tit-for-tat manner could increase costs.

- National priorities - Supply chains will be optimized based on national strategic interests rather than pure economic rationale, hampering global free trade.

- Innovation - Supply chains that straddle the tech divide may suffer slowdowns in innovation as research ecosystems separate. However, competition could also spur new R&D.

- Regionalization - There may be a rise of regional supply hubs centered around leading tech powers like China, US and Europe with less inter-regional exchange.

- Industry shifts - The reshuffling could hurt industries like semiconductors that rely on specialization and integrated cross-border infrastructure. New sectors may emerge.

Overall the US-China tech contest has the potential to fundamentally change the patterns and economics of global production and commerce. Supply chains are poised to become less efficient but more secure as nationalism overrides globalization.

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