Expert: Global supply chains remain interconnected despite trade tensions

From chocolate chips and computer chips to athletic shoes and frozen fish, everyday products consumed by Americans often travel through complex international supply networks before reaching store shelves and households.

In his forthcoming book, Where Does My Stuff Come From? The Strange Economic Power of Global Supply Chains, Willy Shih, a professor of management practice in business administration at Harvard Business School, explores the intricate connections behind global manufacturing and trade, and why understanding those connections matters in an increasingly uncertain economic environment.

Speaking at a virtual media briefing hosted by the Port of Los Angeles on Friday, Shih said his motivation for writing the book grew out of a realization that many people have little understanding of where the products they purchase actually originate.

Recalling his conversations with students, Shih said many simply assumed that products came from online retailers such as Amazon, without considering the extensive manufacturing and transportation networks involved.

"What I really want to do is I want the world to have a better understanding of where their stuff comes from, how interconnected we are," he said.

Drawing on 28 years of industry experience, Shih said he had witnessed China's opening to the world and the transformation of global manufacturing. As businesses reassess their supply chains amid tariffs, geopolitical uncertainty and shifting trade policies, he emphasized that deeply integrated production networks linking China with the US and other economies remain difficult to replace, despite efforts to diversify manufacturing and sourcing away from China.

Responding to a question from China Daily about whether the recent China-US summit and extended trade truce could bring greater stability and predictability to global businesses, Shih said companies were increasingly seeking flexibility in their sourcing strategies.

"I think companies are now trying to create more optionality and diversify some of their risk," he said. "With that uncertainty hanging over people, it's very hard to make long-term decisions and long-term commitments."

While companies are encouraging suppliers to diversify production, Shih said the process of restructuring global supply chains is complicated.

"Until we get some kind of longer-term stability, I don't think we're going to be settling into new patterns. So I think being agile is going to be the new normal."

Discussing the "China Plus One" strategy, under which companies diversify manufacturing and sourcing beyond China while maintaining operations there, Shih said shifting final assembly to other countries does not necessarily reduce their reliance on Chinese suppliers.

Although China's direct share of US imports has declined significantly since 2017, he said Chinese components continue to play an important role in countries such as Vietnam and Mexico.

"Companies, in some sense, are rearranging the final assembly step while the upstream dependence remains," Shih said.

Shih pointed to new shipping connections between Chinese ports, including Shanghai and Ningbo, and Mexico's Pacific coast as evidence of how supply chains are being reorganized rather than simply severed.

He explained that manufacturers moving assembly operations often continue importing intermediate goods from China because established supplier networks offer specialized capabilities and competitive costs.

Building alternative supply chains requires substantial time and investment, he said, recalling how China gradually developed its own manufacturing ecosystem after initially relying heavily on imported components.

"Now if we're talking about localizing supply chains to Mexico, that'll take a decade. That's not something that happens overnight," Shih said.

Shih also questioned whether tariffs alone could bring large-scale manufacturing back to the US.

He said American manufacturers remain competitive in advanced industries requiring specialized technology and proprietary expertise, but the economics of producing many labor-intensive consumer goods domestically remain challenging.

"We should not be afraid to import components or specialized materials from people who can do it better than us as well," he said.

For Shih, the challenges facing global commerce reinforce the central message of his book: international production networks are deeply interconnected, and their benefits are often overlooked.

He cited examples such as frozen fish processed in Qingdao, China, before being shipped to Los Angeles in refrigerated containers, illustrating how products routinely cross borders through specialized manufacturing and logistics networks.

He said understanding how these networks operate could help businesses, policymakers and consumers better appreciate the economic relationships that support everyday life.

"The more the world understands not only the interconnectedness, but the benefits that we get from that interconnectedness and interdependency, the more people understand that, I think the better off we all are," Shih said.

As the Port of Los Angeles reported record cargo volumes, its executive director Gene Seroka said it underscores the resilience of international trade despite policy uncertainty.

"For now, purchase orders back in Asia remain solid, and our customers are moving that cargo when the opportunity is there," Seroka said.