The chip crisis and its ‘Trumpian’ roots

The chip crisis and its ‘Trumpian’ roots

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The chip crisis and its ‘Trumpian’ roots

Semiconductor production line in a Chinese factory.VCG / VCG via Getty Images

What is the current state of the American economy? A quick summary could be “expanding, with bottlenecks.” And some of these bottlenecks reflect the chaos caused by Donald Trump’s trade policy. Where we are now: Employment is growing at a rate not seen since 1984. The same will probably happen with GDP, although we still do not have official estimates for the second quarter. However, we are experiencing shortages of many items, which is posing a problem for production in some areas and causing sharp price increases in others.

The shortage is being resolved in part. For example, two months ago, wood cost almost four times what it was before the pandemic. Since then, its price has fallen more than 50%. Other obstacles, on the other hand, seem more persistent. Global trade is held back by an inadequate supply of standard-size containers, those ubiquitous boxes that carry almost everything because they can be lifted directly from ship decks onto rail cars and truck beds; and experts expect the shortage to last until the end of this year.