This text discusses the merger of Canadian Pacific and Kansas City Southern, creating a rail network spanning North America. The $31 billion merger is seen as a move towards a more integrated continental supply chain, promising efficiency and cost savings in cross-border trade. Despite political tensions, the merger represents an evolution of trade relationships in the face of global populism, rising nationalism, and restrictive trade policies. The text also reflects on recent trade tensions, citing the impact of U.S. tariffs on agricultural exports and the unintended consequences, such as China turning to Brazil for soybean imports. It emphasizes the importance of considering the costs and benefits of industrial policy, as developed economies increasingly adopt such policies for reasons like supply chain resilience, technological supremacy, and economic control. The text concludes by suggesting that governments are using industrial policy to address market failures and global externalities, impacting global trade dynamics and urging the World Trade Organization to weigh the necessity of such policies.

Inspired by: https://realeconomy.rsmus.com/a-rail-merger-and-the-evolution-of-north-americas-supply-chain/