Economic Effects of COVID19

COVID19 has made the globalised world go domestic. Countries are now looking inwards rather than outwards and are facing the never seen before challenge of global supply chains getting disrupted and other such issues. It ll started a few years ago when the world started drifting in regional clusters.
The world had already been drifting into large regional clusters. If we look at the North American model where USA had been doing more trade with Canada and Mexico than with China we understand that already in the pre pandemic scenario it was the case. Now we have problems such as we do not know when the International travel will be possible or we do not know when the borders will open up, coupled with problems such as neo protectionism, industrial policies and subsidies.

All these steps are taken to ensure that we wind up doing more trade than with far off nations. The next 5 to 10 years  are going to be clustered economies rather than  a globalised economy. The countries in North America are going to be more dependent on each other than on China. With the supply chains disrupted they are going to be forced to have an outlook where they would have to start home production and evolve therein.

 cost of home grown and produced goods are going to be much higher than the chinese imports. The people of North America now have to bear the burden of the same. In China the interdependence of American trade has been lesser as they do more trade with Asian countries than North America. So the dependence may not be as much.