Supply Chain Vulnerability to International Trade Costs: An Application to Agricultural Chemicals

I develop a simple method for quantifying the increase in the level and volatility of international trade costs in recent years and the shifts in import sourcing that mitigated this vulnerability and increased supply chain resiliency. I apply the method to data for three industries in the U.S. agricultural chemical manufacturing sector. I find that the average level and volatility of international trade costs rose over the last ten years in all three agricultural chemicals industries, though shifts in import sourcing shares mitigated the increase in volatility. The magnitude of these changes and the contributions of specific source countries varied significantly across the three industries.