Trade: Introduction
Explore this collection of learning resources to understand international trade.
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Explore this collection of learning resources to understand international trade.
Chances are that the “Made in China” or “Made in the USA” tag on your T-shirt is telling you about just one of many stops it made as it passed through a global supply chain. From designing to sourcing, to assembling to marketing, products are rarely made in just one place anymore, not even an all-American Converse. As trade becomes increasingly globalized, hidden costs of global supply chains, such as their effects on the environment, emerge.
By the time you see them in stores, most products have traveled around the globe. Very few products come from just one place anymore. Even when a label says “Made in China” or “Made in America,” it is not quite that simple. These days, the majority of manufactured imports are bits and pieces of final products. A steel frame for a bicycle, salt for packaged meats, a car engine. And the story behind most of the finished products we buy in stores is a globe-trotting journey. Along this ride, the item is designed, its materials are sourced and put together, and then it gets shipped over and marketed, ultimately allowing for the final price tag.
Take a Converse shoe. These sneakers are known for their all-American look. But before a Converse shoe can make it to the shelves, it comes together on the other side of the globe. Converse is owned by Nike, a huge global corporation with a huge global supply network. Every element in the classic Chuck Taylor sneaker has its own origin story. Most gum rubber, which is used for soles, comes from Thailand, Indonesia, or Vietnam. The cotton for the canvas often comes from China, South Korea, or Turkey. Shoelaces can be crafted out of German polyester or Chinese nylon. Once sourced, these pieces will typically be shipped to Vietnam for assembly.
Many companies make their shoes in Vietnam because the manufacturing costs are low. In Vietnam, there are fewer rules about pollution and people work in factories for less money. Once assembled, the shoes are shipped more than eight thousand miles across the ocean to the Converse distribution facility in Ontario, California. But before the Converse can travel across the border to the United States, Nike pays , taxes on imported goods, to the U.S. government, raising prices for both Nike and consumers. Once the shoes finally cross into the United States, they get sent to malls, shoe stores, and directly to consumers. This global process lets Nike sell products like the Converse All Stars for cheaper than they would be if produced in just one place.
But there are hidden costs to global trade. The globe-spanning journeys of products like Converse have massive environmental consequences. Twenty five to thirty percent of all are caused by transporting goods around the world. Many would like to see Nike make their products domestically, bringing jobs and industry to the United States. But because most companies, like Nike, source materials from many countries, tariffs against the cotton or the nylon from China, for example, could actually make American products more difficult and more expensive to produce. Plus, any increased costs taken on by Nike to assemble shoes in the United States instead of Vietnam will also make Converse more expensive. And higher costs would lead some to buy other shoes.
These trade-offs apply not only to shoes, but to cars, computers, and most everything that we use in modern life. Global trade makes products more accessible and connects consumers in one country to workers in another. Next time you lace up a new pair of sneaks, remember they have traveled thousands of miles around the world before you even take a step in them.