The End of the World is Just the Beginning: Mapping the Collapse of Globalization

by Peter Zeihan

Modern manufacturing—and especially modern tech manufacturing—can only function in a world in which gajillions of intermediate products can frictionlessly scuttle about. Only blocs in which manufacturing supply can be colocated with manufacturing demand won’t suffer from catastrophic disruption. That’s a massive problem for German manufacturing, as many of its suppliers are from beyond the horizon and roughly half of its customers aren’t even in Europe. It’s a much bigger problem for Asian manufacturing, where all intermediate products travel by sea (Germany can at least rail intermediate products among its supply chain partners), and most all of the raw materials and end markets are a multi-thousand-mile sail away. China, in particular, is dependent upon countries either a continent away or with which it nurses heavy historical or geopolitical grudges, for nearly all of the high-value-added components in its manufacturing system. With transport costs rising sharply, the portion of the manufacturing supply system that will face the greatest disruption is those low-margin pieces that rely upon low costs . . . such as cheap transport.