The Morning: The changing supply chain

Plus, the Trump campaign, Ukrainian summer camps and the Olympic closing ceremony.

View in browser|nytimes.com August 12, 2024 Good morning. We're covering changes to the global supply chain — as well as the Trump campaign, Ukrainian summer camps and the Olympic closing ceremony. A mask factory in Paterson, N.J. Bryan Anselm for The New York Times The supply chain, reconfigured By Peter S. Goodman I cover the global economy. For decades, major companies have behaved as if geographic distance were almost irrelevant. A factory in China was the same as a factory in Michigan. The internet, container shipping and international trading arrangements had supposedly shrunk the globe. No longer. The pandemic and geopolitical upheavals have exposed the risks of depending on faraway industry to make critical things like computer chips, protective gear and medicines. I recently wrote a book on this topic, "How the World Ran Out of Everything." I'll use today's newsletter to help you understand why commerce has changed — and how companies and governments are reacting. The pandemic shock The emergence of Covid in China ended the previous version of globalization. Quarantines shut Chinese factories at the same time that Western consumers, stuck in lockdown, ordered more manufactured goods like exercise equipment and electronic gadgets. This combination of reduced supply and surging demand made other countries realize that they had become heavily dependent on a single nation — China — for many items, including medical supplies. Covid eventually faded from the headlines, but policymakers and business executives in the United States and Europe faced pressure to diminish their reliance on China. A central reason for concern was the rise of geopolitical tensions. China wasn't merely the world's factory; it is also an autocracy that, under President Xi Jinping, has become more aggressive in asserting global influence. Xi, for instance, has been vocal about bringing Taiwan under China's control, using force if necessary. Taiwan is the dominant manufacturer of the most advanced varieties of computer chips. China's allies have also become more assertive in ways that have disrupted global commerce. Vladimir Putin's invasion of Ukraine triggered sanctions on Russia, which limited Europe's access to energy. The war reduced the flow of grains and fertilizers to Africa and Asia because Russia and Ukraine are both major sources of these goods. In the Middle East, Houthi rebels in Yemen are firing missiles on ships headed toward the Suez Canal as an expression of solidarity with Palestinians. In response, many vessels moving between Asia and Europe are traveling the long way around Africa. That has added as much as two weeks to their journeys while lifting shipping prices. The climate plays a role in the disruption, too. Water levels in the Panama Canal fell during the recent dry season, bringing restrictions on the number of vessels that could pass. All these developments are forcing companies to reconfigure their supply chains. Globalization's next phase The main strategy would have countries make more goods at home. President Biden signed a law that allows for the spending of tens of billions of dollars to subsidize computer chips and electric vehicle manufacturers in the United States. Europe has joined the United States in protecting its domestic auto industry against an influx of low-priced, Chinese-made electric vehicles. President Biden at the Intel Ocotillo Campus in Chandler, Ariz. Tom Brenner for The New York Times Wealthy nations are also sending their orders elsewhere. Vietnam has gained factory orders, and India has emerged as another alternative. As the world's most populous nation, India might eventually develop a supply chain rivaling China's. Walmart is now moving some production from China to India. In the short term, Mexico is a more realistic option for companies that sell many goods in the United States. Mexico has low labor costs plus road and rail connections to American consumers. Asian companies that make parts for U.S. automakers are already setting up factories in Mexico. The supply chain is like the electrical grid — something we take for granted, as long as the lights turn on when we flip the switch. But now we've endured the equivalent of a blackout, forcing us to contemplate what systems we are depending on — and how to make them more reliable. For more Have we learned anything from the pandemic supply-chain crisis? Malaysia is now a crucial part of the chip supply chain, as U.S. and European companies look to diversify from China. The U.S. blocks China from buying some microchips used for artificial intelligence. China is skirting the bans with smugglers and front companies. A Taiwanese chip plant outside Phoenix has struggled with culture clashes between its managers and American workers. THE LATEST NEWS 2024 Election Donald Trump  Doug Mills/The New York Times Donald Trump said his campaign was hacked by Iran. It is unclear what, if anything, the hackers were able to achieve. Biden, in his first interview since the end of his re-election campaign, said he abandoned his bid because he didn't want to create "a real distraction" for Democrats. Trump falsely claimed in a series of social media posts that Kamala Harris used artificial intelligence to create images and videos of fake crowds at her events. Biden and Silicon Valley had a sometimes frosty relationship. A Harris fund-raiser in San Francisco was a chance to reset relations. How do the 2024 presidential and vice-presidential candidates' professional records compare? See their career timelines. Israel-Hamas War Israel ordered civilians to evacuate from part of a humanitarian zone in southwestern Gaza. It said it was planning to fight in the area because Hamas had "embedded terrorist infrastructure" there. "This is worse than I ever could have imagined": An American doctor spent three weeks in one of Gaza's last functioning hospitals. Watch some of the video he captured. More International News Morning exercises in Ukraine.  Diego Ibarra Sanchez for The New York Times In Ukraine, traditional summer camps for young people are striking a more militaristic and patriotic tone. A wildfire is spreading near Athens. It has damaged buildings and prompted evacuations. A landslide at a garbage dump in Kampala, Uganda's capital, has killed at least 21 people, according to local officials, Reuters reports. Gangs in Haiti have sidestepped the U.N.-backed Kenyan security forces, redirecting their attacks to the outskirts of Port-au-Prince. Britain's anti-immigration riots highlighted a bigger challenge for Prime Minister Keir Starmer: fraying public services and a cost of living crisis. Filipinos living on a contested island in the South China Sea are on the frontier of a possible conflict. Other Big Stories Global warming could trigger changes to the natural world that would be hard, if not impossible, to reverse. Read how close the planet is to its climate tipping points. In Las Vegas, nights have been getting hotter much faster than the days. Hot nights, studies show, can be deadly. Some I.V.F. clinics are moving frozen embryos out of red states, prompted by an Alabama court's ruling that deemed them "unborn children." Opinions The investigative technique that put Charles Don Flores on death row is now prohibited in Texas. He's about to be executed anyway, he says for Opinion Video. Let's call the far-right protests in Britain what they are: Islamophobic, Hibaq Farah writes. The U.S. government can encourage more Americans to eat vegetables by teaching them how to cook them, Bee Wilson argues. Here are columns by Ezra Klein on the Harris campaign, Nicholas Kristof on travel advice and David French on conservatism. Subscribe Today The Morning highlights a small portion of the journalism that The New York Times offers. To access all of it, become a subscriber with this introductory offer. MORNING READS In New South Wales, Australia.  Matthew Abbott for The New York Times Dirt: An Australian start-up wants to use fungi to slow climate change. California rice royalty: Koda Farms influenced generations of chefs to cook with American-grown, Japanese-style rice. It will soon close shop. Constantly online: Want to know what's happening on the internet? Listen to these podcasts. New York: This bike-riding barber travels around the city in search of the "dopest" places to cut hair. Metropolitan Diary: The perfect head for that hat. Lives Lived: Bob Tischler was part of the production and writing team that helped revive "Saturday Night Live" after the show's low point during the 1980-81 season. He died at 78. OLYMPICS Au revoir! Gabriela Bhaskar for The New York Times Closing ceremony: An uncharacteristically giddy Paris bid farewell to the Games, passing the torch to the next host, Los Angeles (via Tom Cruise). Los Angeles: The 2028 Games will be the third for the city as host. It will be a challenge to repeat the success of 1984. Gymnastics: Jordan Chiles will lose her bronze medal in the floor exercise after a court invalidated a correction to the American's score. Basketball: The U.S. women's team won its eighth straight Olympic gold medal after beating France. Read a recap. Medal count: At the end of the Games, the U.S. topped the total medal count (126) and tied China for the most golds (40). Superlatives: The Athletic team picked their favorite moments of the 2024 Olympics. ARTS AND IDEAS Backstage at Miu Miu's spring 2024 show. Simbarashe Cha for The New York Times Miu Miu, Prada's little sister brand, has become fashion's biggest success story. It sets trends like the extreme miniskirt and is currently halfway to $1 billion in sales for 2024. As hot as the brand's growth has been, it also is a bit of a mystery, Jessica Testa writes. More on culture The movie adaptation of Colleen Hoover's "It Ends With Us" is on track to earn $50 million in North America on its opening weekend. Disney announced it will expand its fleet of cruise ships and spend billions on new rides at its theme parks. The rapper Young Thug's trial on racketeering and gang conspiracy charges, already the longest trial in Georgia's history, is set to resume today. Read what happens now. THE MORNING RECOMMENDS … Johnny Miller for The New York Times Smother these juicy garlic-and-herb filled meatballs in greens. Avoid online scams. Roam with cowboys and flamingos in southern France. Find a better way to store your toilet paper. Gift the golfer in your life something useful. Take our news quiz. GAMES Here is today's Spelling Bee. Yesterday's pangrams were backlot and bootblack. And here are today's Mini Crossword, Wordle, Sudoku, Connections and Strands. Thanks for spending part of your morning with The Times. See you tomorrow. Sign up here to get this newsletter in your inbox. Reach our team at themorning@nytimes.com. Editor: David Leonhardt Deputy Editor: Adam B. Kushner News Editor: Tom Wright-Piersanti Associate Editor: Lauren Jackson News Staff: Desiree Ibekwe, Sean Kawasaki-Culligan, Brent Lewis, German Lopez, Ian Prasad Philbrick, Ashley Wu News Assistant: Lyna Bentahar Saturday Writer: Melissa Kirsch Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for the Morning newsletter from The New York Times, or as part of your New York Times account. To stop receiving The Morning, unsubscribe. To opt out of other promotional emails from The Times, including those regarding The Athletic, manage your email settings. 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