The COVID-19 pandemic has caused a global upheaval of epic proportions across every sector of the economy. Aside from health care, perhaps no part of our interconnected world has been impacted as much as international trade.

Recently, the World Trade Organization reported the pandemic is expected to cause trade to fall between 13 and 32 percent in 2020. Compared to the 9 percent drop following the Great Recession, these figures are staggering. Let’s look at how the pandemic is impacting the flow of goods and services in real time.

1. U.S. and China Trade War

It may seem like ages ago, but it’s only been a few months since talks of a trade war between the U.S. and China dominated headlines. It’s easy to forget, but a “tariff war” has been in progress for two years now, with U.S. tariffs of 25 and 10 percent on steel and aluminum, and Chinese retaliatory tariffs of 25 percent on many U.S. goods, like soybeans.

Now with COVID-19 thrown into the mix, an already precarious situation was dealt another destabilizing hand. China has made allegations against the U.S. military saying they released the COVID-19 virus, and President Trump has increasingly shifted blame away from his own administration onto China for not doing enough to stem the initial spread. As medical supplies and active pharmaceutical ingredients are heavily manufactured in China, this escalated rhetoric could have further ramifications down the line.

2. Global Supply Chain Grinds to a Halt

Last week, U.S. Customs and Border Protection (CBP) announced critical medical supplies like respirators, surgical masks, and gloves would not be allowed to leave the country, unless the Federal Emergency Management Agency (FEMA) deemed it appropriate to do so. The U.S. is not alone: 54 governments have also announced limits on these exports.

Now, with one-third of the global population on lock down, the world’s biggest country in lockdown, India, has brought the transportation of goods to a halt. Daily freight movement has dropped to a mere 10%. Based on data from April through June 2019, freight transported averaged a total of 56,869 ton-kilometers (that’s the summation of every one ton of goods moved one kilometer). Each month the lockdown continues, we can estimate a deficit of over 50,000 ton-kilometers of freight – a huge blow compared to last spring’s average.

3. Industry Looks Inward, and Americans Look Online

Mid-March brought panic across the United States as there was (and continues to be) a critical shortage of personal protection equipment (PPE), ventilators, and hand sanitizer. Some in the private sector switched to their traditional manufacturing to producing essential medical supplies instead, and President Trump signed the Defense Production Act, allowing him to request and incentivize companies to make this shift.

Meanwhile, American consumers have shifted to online and mobile shopping. One survey revealed that 31.7% of consumers plan to shift to completely buying online. This shift could have a negative impact on local businesses. Local restaurants who use meal delivery services have a portion of their profits taken by such services, and 46 percent of American small businesses do not have a website at all.

Looking Ahead

One thing is clear: Our global supply chains are complex interdependent systems that are not immune to shocks and disruptions. Despite this, we must work to strengthen our global trade systems. In times of crisis, knee jerk reactions often happen, causing extreme changes that proponents claim will “ensure nothing of this scale happens again, by making us dependent only on ourselves.” We must remember that while global trade has taken a hit, it is still the most viable, dependable approach to effectively bolster our economy in a modern, globalized society.