1、 The COVID-19 pandemic revealed the vulnerability of international value chains in the face of global shocks.This has triggered a political discussion regarding a possible reshoring of vulnerable supplychains back home.The aim is to reduce dependencies on foreign suppliers and thus improve crisisres
2、ilience of the domestic economy.The debate is also rooted in the growing dependence on Asian suppliers and the colliding politicaland ideological systems between China and the West.Unilateral decoupling of the EU from China(a doubling of trade costs)would reduce real income in theEU on average by 0.
3、8%.In terms of GDP in 2019,this equals a permanent loss in real income of131.4 bn EUR.Should China retaliate,real income would fall by 1.0%(170.3 bn EUR).With its ex-tremely interconnected economy,real income in Germany would even decline by 1.4%(48.4 bn EUR).China would also lose from such a trade
4、war,with real income declining by 1.3%.Should the EU increase its trade barriers against all its non-European trading partners,real income in the Union would fall by 3.5%or 584.3 bn EUR in case of a unilateral increase and by 5.3%or 873.1 bn EUR in case the rest of the world responds by also raising
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