The ongoing Covid – 19 pandemic has had a major impact on global trade and commerce, both politically and economically. There is also an impact of international trade on the pandemic and the virus, very similar to the spread of the Bubonic plague or Black Death in Venice and eventually the rest of Europe during the middle ages. The pathogen utilised the already established routes of trade and commerce to spread at a higher rate and reach different parts of the world. The pandemic intensified already existing tensions between different countries, most notably between China and the USA. The advent of globalisation has transformed the world economy into a shared economy but this changed due to the effects of the pandemic. The pandemic affected international trade by causing a decline in the most basic and essential economic functions, supply and demand. International trade has been hit especially hard with global merchandise trade recording its largest-ever one-period decline in the second quarter of 2020, falling 14·3% compared with the previous period. The world economy has contracted, and even after much effort from governments the growth in global GDP will be 3.2 per cent below pre-pandemic projections. The impact on trade was felt differently by the three main economic groups: consumers, producers and governments with all of them being interconnected. Lockdowns imposed throughout the world had a major impact on consumer psychology and behaviour, in turn affecting the demand. Change in consumer habits due to the circumstances meant that demand for certain inelastic goods rose exponentially, at the same time demand for elastic goods fell drastically. This has led to consumer demand suffering a major downfall triggering a chain reaction leading to a major downward spiral and the potential of a global recession on the scale of the Great Depression. This as a by-product leads to public issues such as unemployment, defaults on loans, incapacity for survival, and other related problems. Demand for e-commerce and pharmaceuticals rose exponentially while it fell drastically for the majority of the other industries. The ongoing crisis and increasing levels of unemployment mean a fall in the spending power of consumers. Consumer access to certain goods was also limited due to the breakdown of the global supply chain. A fall in consumer demand and spending power leads to major implications for both producers and governments. The impact on producers is uneven with producers in certain industries such as pharmaceuticals and e-commerce reaching record sales and others struggling to make ends meet. The breakdown of the supply chain has caused issues for various producers and left them unable to cope with rising demand. Delays and gaps in the industry caused due to the pandemic further add to this breakdown of the supply chain. Several producers have had to cut costs and improvise to adapt to the new circumstances. Import and Export restrictions imposed around the world have forced producers to bring down supply due to the high cost and unavailability of raw materials. Industries have had to take steps for workforce management and adapt to work from the home system as well as take additional measures to ensure the health of employees. Producers have also been forced to take steps to tackle the demand switch in consumers caused due to the pandemic as well as move to online mediums to sustain themselves. An increase in the cost of production and less demand has forced companies to cut costs and lay off employees, causing an increase in unemployment, in turn further decreasing demand. This can be better understood with the examples of the increase in the cost of air cargo and the fall in demand for the travel industry. Small scale producers have been especially hard hit with most having been forced to close operations. The ongoing crisis and uncertain circumstances have made producers delay making any big decisions or expanding their business. The impact on governments is essentially the result of the impact on both consumers and producers along with political factors. Different countries were impacted differently by the pandemic with low-income countries, most of the sub – Saharan African region getting the most affected. Several high-income countries which usually imported large amounts of goods faced shortages of several goods due to the unavailability of goods and the non-willingness of other countries to export. The change in the geo-economic situation leads to changes in the shared economy with countries adopting protectionist and nationalistic policies. Governments worldwide allocated a major part of their financial budgets to the healthcare sector to counter the pandemic causing problems for the other sectors and causing stress on the healthcare sector. Given the nature of the modern welfare state, the government has also had to take steps to tackle the economic ad social inequality and the impact on human relations caused as due to the pandemic. The glocalsiim phenomena have been seen developing in various parts of the world. Geo-politics came into play especially related to the spread of the virus and vaccine in the form of travel restrictions, specific vaccine requirements and Vaccine diplomacy. Governments have taken steps to introduce money into the economy through stimulus and relief measures, following the Keynesian theory of economics. The great divide between the developed and developing nations has been widened by the pandemic and left many governments struggling. The loss of revenue, the decline in national income and the increased need for spending have created financial issues for many governments around the world. The pandemic has intensified already existing problems in society and given rise to new ones. Both government and private sector cooperation and efforts are essential to tackle the various efforts of the pandemic. There is a need for a greater level of transparency in trade policy decision-making and the intent to increase cooperation between different countries. Filling the gaps present in the supply chain and keeping it moving, especially for essential products is crucial for economies around the world to start recovering. Governments need to rethink policies and not make things worse by implementing export restrictions and trade barriers. In the shorter run, Governments need to take an active role in the economy taking steps under the Keynesian theory to allow the economy to recover while in the longer run, allowing it to become self-sustainable, better prepared to handle similar crises and become more free market capitalisation oriented. Governments thus need to think of both the short and long run and serve the public interest, not vested interest. There is a need for further liberalisation and international cooperation to counteract the effects of the pandemic. In an unprecedented global health crisis like this, trade is essential to save lives and livelihoods; and international cooperation is needed to keep trade flowing. The effects of the pandemic also provide us with an opportunity to improve our system and framework in the longer run. It is essential for us to fully understand the impact of the pandemic because only then can we take steps to tackle the same. This provides us with the opportunity to reform trade arrangements in ways that ensure healthy and sustainable lives for all—something that governments committed to doing when they signed up to the increasingly fragile UN 2030 Sustainable Development Agenda. With the lives and livelihoods of billions of people globally now hanging in the balance, this opportunity must be utilised to its fullest potential.
