High oil prices reversing impacts of globalization, outsourcing of jobs: CIBC

The rising cost of energy is undercutting global trade by raising transportation costs to such levels that businesses will be forced to look closer to home for suppliers, says a CIBC World Markets report.

“Globalization is reversible,” the bank’s chief economist, Jeff Rubin, wrote in the study released Tuesday. “In a world of triple-digit oil prices, distance costs money. And while trade liberalization and technology may have flattened the world, rising transportation prices will once again make it rounder.”
Rubin and co-author Benjamin Tal say the cost of moving goods – particularly heavy materials such as steel – not the burden of tariffs, is the largest barrier to global trade today.

They calculate the explosion in transport costs caused by the record price of oil has effectively offset all the trade liberalization efforts of the past three decades.

Canadian Press