Crisis, Trade War, and Supply Chain Disruption

The 2008 global financial crisis triggered what trade economists, including Richard Baldwin, have called the "Great Trade Collapse": world trade volumes fell by roughly twelve percent in 2009, an even sharper decline than the fall in global output, largely because the crisis hit durable goods and capital equipment, which are heavily traded, particularly hard, and because the elaborate cross-border supply chains built up over the preceding decades transmitted the shock rapidly from one country to the next. Trade recovered over the following years but grew more slowly relative to global output than it had in the pre-crisis decades, a pattern some economists labeled "slow trade."