Globalization faces its next crisis | World news

“It’s chaos,” said Zaidi, 52, who has worked in the industry for three decades. “It’s the domino effect. Everything is blamed on the war.”

Cloth is probably not the first item that comes to mind on the list of cargo raided by war. The most obvious manifestation is the wildly fluctuating prices of oil and natural gas, a result of the effective closure of the Strait of Hormuz, the canal that links the Persian Gulf to the rest of the planet.

But the consequences of disrupting trade in much of the Middle East are much broader and increasingly evident in industries beyond energy. From industrial products to tropical fruits, products needed in one place are stuck in another. The longer hostilities persist, the greater the upheaval for shoppers and businesses across the global economy.

The fallout amounts to a rebuke to the notion that globalization is history, a claim popularized by nationalist movements on multiple continents.

President Donald Trump has waged a trade war under the pretext of forcing factory production to return to the United States. China and India have sought versions of self-sufficiency. However, the war in the Middle East has highlighted the enduring reality of global economic integration. Supply chains are not only intact but expanding, increasing risks when the movement of goods is disrupted.

“Every time we have one of these shocks, we have predictions that it’s the end of globalization,” said Steven A. Altman, a globalization expert at New York University’s Stern School of Business and co-author of a recent study on the continued expansion of trade and investment across borders. “The narrative is different from reality.”

The upheaval of the COVID-19 pandemic revealed how bottlenecks in shipping can trigger cascading problems. A floating traffic jam outside a port in Southern California leaves chemicals needed to make paint in Delaware stranded. It ties up containers that could otherwise be used to load cargo in China, delaying electronics exports bound for Ireland and raising the price of freight transportation everywhere.

Such discoveries led companies to highlight commitments to “supply chain resilience” alongside their usual devotion to efficiency. Retailers like Walmart moved manufacturing from Asia to Mexico, reducing the distance between factories and customers to limit their vulnerability to the dangers of global trade.

But the push toward greater regional trade appears to be reversing, according to Altman’s report.

From 2020 to 2023, the share of US imports from Mexico and Canada increased from 26% to 29%. But during the first nine months of 2025, it fell to 27%.

As the pandemic fades into memory, international companies have once again sought out suppliers of lower-cost goods, wherever they are.

And as the Trump administration dismantles federal programs aimed at increasing renewable energy sources like solar and wind, the nation is more exposed to the implications of higher oil and gas prices.

All of which means that the disruption of shipping traffic through the Persian Gulf is likely to spread the dysfunction widely.

The most immediate crisis centers on energy. The oil tankers have been attacked. Oil facilities have been closed. The war has caused “the largest supply disruption in the history of the global oil market,” the International Energy Agency declared Thursday.

Not even the concerted release of oil reserves by 30 countries could prevent the price of oil from once again exceeding $100 a barrel. The prospect of a sustained rise in energy prices has economists warning of the potential for stagflation, a term coined to describe the impact of shocks in the 1970s: stagnant economic growth and higher prices.

Higher energy prices make fuel for trucks, tankers and airplanes more expensive, increasing freight transportation costs. Higher gas and air conditioning bills leave households with less money to spend on goods and experiences, a drag on economic growth.

Companies that import goods into the United States, the world’s largest economy, are grappling with confusion over the future of Trump’s tariffs after the Supreme Court ruled that he had violated his presidential authority.

“We have created parameters of uncertainty equal to, if not greater than, during the pandemic,” said Nick Vyas, a supply chain expert at the University of Southern California’s Marshall School of Business. “It’s a perfect storm for stagflation.”

In Southeast Asia, shrimp and tropical fruit producers are now struggling to transport their products to Europe and North America. From India to Indiana, farmers are facing higher fertilizer prices due to the disruption of stocks produced in the Persian Gulf. The price of aluminum is rising, given the impediments to shipments from Qatar and Bahrain. Helium, a critical element for making computer chips, could soon be in short supply.

“This is not just an oil story,” Vyas said. “This is an industrial supply story.”

The Gulf is a dominant source of urea, the main form of nitrogen fertilizer. To make it, ammonia is needed, which is produced with natural gas. As long as energy production is hampered, the ability to produce fertilizers will be limited. Urea prices have already increased significantly.

If farmers economize on fertilizer use, that could reduce harvests, decreasing food supplies and raising prices. In vulnerable countries in sub-Saharan Africa and South Asia, that could lead to increased malnutrition.

The focus of concern is the disruption of sea routes and air cargo hubs in the Persian Gulf.

Since planes cannot land or refuel at the main airports in Dubai and Doha on trips between Europe and Asia, they have had to divert, often over Central Asia. That has lengthened trips and required more fuel. And that has forced shippers to limit the amount of cargo they transport.

The cost of air travel from Asia to Europe has doubled since the start of the war. Transfer from Vietnam to the United States has increased by almost half. This has challenged the ability of American auto manufacturers and retailers to protect electronics and electronic components.

“Freight rates are more volatile,” said Chloe Lee of Olympia Express, a freight forwarding company in Ho Chi Minh City, Vietnam. “Many Vietnamese exporters are becoming more cautious about booking shipments.”

This is the time of year when major importers tend to negotiate year-long contracts with ocean carriers. Container shipping prices have been relatively cheap due to a glut of new vessels entering the market. But now ocean carriers are absorbing the likelihood of significantly higher fuel prices just as some routes are hampered by war.

“It’s certainly one thing after another in this industry,” said Ryan Petersen, chief executive of Flexport, a global logistics company.

In the area of ​​shipping, the latest conflict in the Gulf is unfolding just as the last one seemed to be dissipating: attacks by Houthi rebels on ships entering the Red Sea. Ships traveling between Europe and Asia avoided that corridor and instead took the long route around Africa.

In recent months, ships had returned to the Red Sea. Not anymore.

Now that ships are once again crisscrossing Africa on voyages between Europe and Asia, shippers are setting rates and raising prices.

That was the situation Zaidi and his Canadian textile company faced this week.

He attempted to send a shipment of cloth to England from Pakistan. Shippers said they were unable to locate the shipping containers. The steel boxes were scattered in ports around the Indian Ocean, kept in place by the closure of shipping traffic through the Middle East.

“I am willing to pay whatever it costs and I have no containers available for the next three weeks,” Zaidi said.

His company attempted to ship 10 containers of machinery to Pakistan from Durban, South Africa. He had already booked the trip at a price of $2,500 per box. Suddenly, the airline raised the fare to $4,800. The route required a much longer journey to Singapore.

The further Zaidi looked, the greater his concern grew.

If the shipping crisis persists, cotton harvested in China could arrive late in Pakistan, delaying its yarn production. Factories weaving fabrics in Indonesia will have difficulty finding raw materials. Making clothes will become increasingly difficult.

“Prices will go up,” he said.

This article originally appeared in The New York Times.