Mary E. Lovely on what's really going on with global supply chains

So

before we get into the policy implications, we mentioned Vietnam, but are there any other countries that we're seeing a lot of this not transshipment, but value-added trade going through that the US is now importing more from?

Well, Mexico is another one.

And of course, Mexico is on the hot seat with the renegotiations for the US-Canada-Mexico agreement underway.

We have a lot of Chinese content coming in from Mexico just by numbers relative to the total basket.

But that's because we import a lot from Mexico, now our number one import source.

So that might be disturbing, except that the Chinese content in Mexico in most sectors is growing slowly and for most sectors is below 10 percent.

There's, of course, special concern in electronics and in motor vehicles, auto parts.

But otherwise, even though it has grown, it's not where we think this is a danger point.

It has grown much more rapidly and is much larger in Vietnam, where in electronics, we see more than a quarter of the content of that, on average, of that laptop coming from Vietnam originating in China.

I might add that we might be undercounting as well because China has done a lot of outward FDI into these countries and Chinese-owned factories may be using more Chinese content than the average.

And we're looking at average, the input-output tables that we use capture those average recipes firms are using to make the goods.

So I would say Vietnam and Mexico are clearly key in this.

And we do a deep dive into both of them in our policy brief.