The Deglobalization Tax – How Bringing Supply Chains Home is Costing the American Consumer

The phrase frequently appears in op-eds, earnings calls, and late-night discussions between freight forwarders and brokers who used to clear their containers in three days but now have to wait a week. de-globalization. It sounds like a word that belongs in a Geneva conference room—clinical, almost academic. However, there is a price tag attached to every big-box store in suburban Ohio this spring. In February, a blender cost forty-nine dollars; today, it costs fifty-eight. There was no sign explaining why.

Everyone’s narrative is that supply chains are returning home. In any case, that is the political argument. The Trump administration imposed tariff after tariff between April 2 and April 11, resulting in a 145% levy on Chinese imports, a 10% floor on almost everything else, and a 90-day pause that felt more like a breathing exercise than a strategy. Shipping to American dealers was discontinued by Jaguar Land Rover. Pre-orders for the Switch 2 were quietly discontinued by Nintendo. Apple was either shifting iPhone production domestically or not, depending on which White House aide you trusted that week.

In early April, Senthil Veeraraghavan at Wharton stated unequivocally that tariffs are a tax, and taxes are paid. Most consumers absorb the difference, with some companies absorbing margins. His first concerns are low-margin items, such as inexpensive clothing and unglamorous industrial parts that go unnoticed until the lawnmower stops working. These supply chains break rather than bend.

However, it is difficult to conclude that globalization is complete when examining the actual trade data. As of late 2023, the world economy was redistributing itself rather than truly deglobalizing, as J.P. Morgan’s analysts correctly noted. Indeed, since 2018, China’s share of American imports has decreased. However, Vietnam, Mexico, India, and a number of Southeast Asian nations picked up the slack, and their factories are now bustling with orders that used to arrive in Guangdong. The trade continued, and the map redrew itself.

In shipping circles, there is a perception that what we are witnessing is actually nearshoring disguised as patriotism. No factories are relocating to Akron. They are relocating to Monterrey. According to Enver Yücesan’s research published in the International Business Review, political pressure seldom results in complete reshoring because local ecosystems and skilled labor pools are still lacking. It’s one thing to build a semiconductor factory in Arizona. It takes a decade to build the twelve suppliers that feed it, and most boards are impatient.

It’s difficult to ignore the divergence between the rhetoric and the receipts. Politicians discuss the return of American jobs. In order to avoid a tariff line, procurement managers discuss routing through Vietnam. A family in Phoenix is somewhere in the middle, wondering why a child’s car seat costs so much and whether anyone would even bother to explain.

It’s really unclear what will happen next. No one wants to ration insulin during the next geopolitical crisis, so reshoring essential pharmaceuticals makes sense. However, using the same reasoning with screwdrivers and socks seems like a costly way to make a point. Line by line, the bill is already quietly making its way into the checkout lanes. The question that will determine the next election cycle and potentially the next ten years of American trade is whether voters relate that bill to the policy that gave rise to it.