It has become quite common for high-value U.S. components to be shipped to foreign destinations for assembly into finished products, many of which are shipped back to the United States.21 This so-called round-tripping enables firms to take advantage of economies of scale at each stage of the production process as well as different wage and skill mixes in different locations.
Although the TAF and other liquidity-related actions appear to have had some positive effects, such measures alone cannot fully address fundamental concerns about credit quality and valuation, nor do these actions relax the balance sheet constraints on financial institutions. Hence, they alone cannot eliminate the financial restraints affecting the broader economy.