US-China feud is accelerating the biggest shift in trade since the cold war, away from globalisation
- Trend described as ‘deglobalisation’ and ‘balkanisation’ is leading to shorter supply chains as companies try to keep up with more sophisticated consumer demand
- As firms rush to avoid Donald Trump’s tariffs and other geopolitical volatility, the trend is accelerating, leading to a complete shift in global trade
From an office in Tijuana, Mexico, Roberto Durazo has been capitalising on one of the biggest shifts in global trade since the end of the cold war.
His company, Ivemsa, has been helping dozens of companies move their factories out of China and other parts of Asia and into Mexico to make goods to be sold domestically and in the United States. Operating in what is known as the “shelter industry”, firms like Ivemsa help international companies operate in Mexico without having to maintain a legal entity.
“We have talked to many companies from Asia who are interested in Mexico as a platform to manufacture and send their products north to the US – that's really where the market is,” Durazo said.
“A lot of automakers are doing business here, for example Kia Motors from South Korea established a big facility in Mexico. And they moved at least 30 of their suppliers from Asia into Mexico. Their key suppliers followed them because if they don’t, they may lose the business.”
This example illustrates a wider movement that predates the trade war between China and the US, but one which experts now say is irreversible. After decades in which globalisation seemed to be an unstoppable force, the trade war is accelerating a complete transformation of global trade towards a more fragmented model, and Durazo is operating at ground zero.