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The global economic landscape is changing dramatically. Gone are the days of the global economy relying on ultra-efficient "just-in-time" supply chain models characteristic of the hyper-globalization era. Instead, the focus has shifted towards developing supply chains that are resilient and can absorb shocks. This change has been brought about by the onset of a geo-economic fragmentation era which is marked by strategic competition and the trade weaponization. The main argument of this paper is that the reshaping of global supply chains especially in the context of US-China trade war does not signify real "decoupling" but rather a strategic "reallocation." This reallocation corresponds to the "China Plus One" approach by which companies mitigate risks by choosing a second main supplier without totally giving up their Chinese operations or supply chain. The analysis of US trade data from 2017 to 2022 shows that even though the direct share of China in US imports has decreased, China has concurrently turned out to be a very important upstream supplier for the new manufacturing centers that are replacing it. Moreover, this reshuffling is highly concentrated with one single alternative supplier often taking over the greater part of the market share lost by China. More importantly, the findings show that tariffs on intermediate goods cause greater economic disruption and more persistent inflation than those on final goods, thus making the situation of policymakers one of the most difficult. The analysis shows that this major reallocation will require corporate strategy to fundamentally evolve towards proactive geo-political risk management being centralized and a recalibration of international economic policy that recognizes the legitimate competition between efficiency and security.
Keywords:
Economic Policy, Geo-Economic Fragmentation, Globalization, Supply Chain, Global trade
Cite Article:
"Geo-Economic Fragmentation and The Reallocation of Global Supply Chains", International Journal for Research Trends and Innovation (www.ijrti.org), ISSN:2455-2631, Vol.11, Issue 1, page no.a274-a285, January-2026, Available :http://www.ijrti.org/papers/IJRTI2601036.pdf
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ISSN:
2456-3315 | IMPACT FACTOR: 8.14 Calculated By Google Scholar| ESTD YEAR: 2016
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 8.14 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator