The structure of international trade, global value chains and trade wars in the twenty-first century

Abstract

A key change in the field of international trade in recent decades is the growing interconnectedness of geographically dispersed trade and production patterns, which increasingly take place within so-called global value chains (GVCs). In this chapter, we discuss these changes in international trade and production, why they occurred and what role GVCs have played. We then show how GVCs have also changed the politics of trade and, as such, the nature and outcomes of trade disputes. Firstly, the position of firms within GVCs has often become a more important determinant of their trade preferences than their nationality. In addition, as GVC structures can be adjusted in response to trade restrictions, trade wars have become more difficult to 'win'. We also discuss how GVC trade has become increasingly controversial and that this backlash against GVCs and globalization more broadly, has played a key role in the fueling of trade wars.