Just as in 2008, U.S. and EU policymakers are staring into a black hole as global trade plunges and industry sputters.

But 12 years on, they are more divided about whether the answer is to oil the wheels of free trade, or whether the true lesson of the coronavirus crisis is that long supply chains (especially those tied to China) are a vulnerability and that big Western economies need to switch to producing more at home.

During the debt crisis a decade ago, the G20 group of leading economies spearheaded the response by calling out countries that resorted to protectionism and, learning the lessons of the Wall Street crash of 1929, preached the virtues of low tariffs and reduced customs barriers. There is no such consensus this time, as borders close and Washington and Brussels call for reshoring critical industries.

No one doubts the severity of the problem. China reported that its exports plummeted an eye-watering 17 percent in the first two months of this year and, in a dramatic sign of a contraction in industrial production and transport, world oil prices have sunk more than 60 percent since the beginning of the year. In the first two weeks of March, German and French shipments to the U.S. were down 10.6 percent and 12.5 percent in comparison with the same period last year, according to S&P Global Market Intelligence.

Faced with that scale of slump, German Economy Minister Peter Altmaier has insisted trade policy must play a major role in escaping from the crisis. "That's why we should work together ... and avoid tensions and obstacles to world trade," he said.

In the short term, the U.S. is also moving toward giving companies a 90-day relief on tariff payments, but Trade Representative Robert Lighthizer is giving a longer-term sense that globalization has gone too far. "We are learning in this crisis that over-dependence on other countries as a source of cheap medical products and supplies has created a strategic vulnerability to our economy. For the United States, we are encouraging diversification of supply chains and seeking to promote more manufacturing at home."

While the administration of U.S. President Donald Trump has long been more clamorous than Europeans about reshoring, the topic has also leapt up the agenda in Europe amid the coronavirus crisis, with both Germany's Altmaier and his French counterpart Bruno Le Maire calling for more pharmaceutical production to come back to Europe.

Doing what they can

The world's largest industry associations, including Germany's BDI, France's MEDEF and South Korea's FKI reckon that the recipe for recovery is definitely more trade. They are urging policymakers to step back from export restrictions and to "minimize disruptions to global value chains and refrain from unnecessary new regulations and trade barriers."

But most of the measures at policymakers' finger tips are relatively modest and technical.

Italy was one of the first governments within Europe to step up. Its decree that tackles the economic impact of the coronavirus includes additional funding to support "internationalization" of businesses, financing for a communication campaign to bolster exports and other promotional initiatives.

For its part, the European Commission is trying to give EU exporters a boost by ramping up export credit insurance. Brussels changed existing rules to enable EU countries to provide insurance for short-term export-credit risk. Germany's chambers of commerce had issued an urgent call for governments to cover insurance for foreign trade, warning that private credit insurers were withdrawing from what is normally a formality.

France on Tuesday announced it would insure foreign trade across the world, rather than only for 17 countries.

But here again, policymakers are being tugged in two directions. Countries may praise open trade but also have deep strategic concerns about the export of medical equipment. A report last week from the Swiss-based Global Trade Alert found that 54 countries have imposed export restrictions on medical goods since the start of the year.

G20 trade ministers on Monday vowed to keep that market open, but stopped short of promising not to impose export restrictions. EU trade chief Phil Hogan called on leaders to keep trade flowing and to "avoid the downward spiral of restrictive measures or stockpiling" but at the same time defended the EU's controls on shipments of personal protective equipment.

Crippling global trade

Within Europe, the crisis has piled stress onto intra-European supply chains with new border checks causing traffic jams for truckers. The European Commission had to call on EU countries to implement so-called green lanes to permit the transportation of goods and is seeking to minimize checks and paperwork for transport workers.

Even if the EU resolves those troubles within its common trade area — the single market — the coronavirus poses a more global challenge.

"We'll have a rude awakening once the numbers on German-Chinese trade come in in the coming weeks," said Volker Treier, head of foreign trade at the German Chambers of Industry and Commerce (DIHK).

Italy will see its exports drop by 5.1 percent in 2020, according to figures from Italy’s industry lobby Confindustria. The country's exporters are faced with enormous challenges as the entire country has been in lockdown since March 10, said Marco Bonometti, president of Confindustria Lombardy, the worst-hit region in Italy.

“The 'total lockdown' message perceived abroad is leading to an isolation of Italy by important industrial and commercial partners and to the concrete possibility of losing positions compared to our international competitors," Bonometti said. “[The shutdown of factories] risks paving the way for unpredictable scenarios with damages difficult to quantify, first of all for the many businesses making their living on export."

Head above water

For now, the politicians are simply trying to gauge how bad the trade slowdown will be.

Signals from global air cargo are dire. All EU countries apart from Ireland have a ban on travel from third countries. Airport lobby ACI-Europe said that even if the industry gets up and running again by the end of April, the world will see 700 million fewer passengers pass through Europe's airports this year — a drop of 28 percent.

Crucially, airliners carrying passengers are also loaded with cargo. As fewer passenger planes are flying, cargo doesn't move as cheaply or as fast. "Roughly half of global air trade travels in the so-called belly of airplanes," said Phil Levy, chief economist with Flexport, a freight logistics provider. "Dedicated cargo planes are trying to ramp up operations but air freight is definitely getting severely constricted."

That doesn't have to mean the end of global trade, though. Some 80 percent of the volume of international trade in goods is still carried by sea. To keep maritime trade going, the International Chamber of Shipping has called on governments to allow continued access to ports worldwide and the rapid changeover of ships' crews.

Ocean freight looks like it's keeping its head above water — for now. The chairmen of Maersk, the world's biggest shipping container line, said the company is running at full speed despite "significant challenges in global supply chains."

The Dutch port of Rotterdam, the biggest in Europe, said the impact of the virus outbreak is already palpable. In the first few months of this year volumes for all cargo flows will lag considerably behind the original prognoses, a spokesperson said.

The second-biggest European port, Antwerp, hasn’t seen a decline in trade in goods yet, a spokesperson said. But Antwerp does expect a "a large economic impact" soon when fewer ships start to come in.

Exporters themselves are groping in the dark for a sense of what the post-corona trade world will look like.

Andrea Moltrasio, who owns a paint factory in Bergamo in northern Italy, has seen exports to France and Germany decrease as car factories close down, but doesn't want to shut down his own operations.

"The idea of keeping machines idling with very few staff is prudent. Otherwise, restarting after having shut down for some time would be tough. We are not China,” he said. "It's the most difficult situation I have faced in my life."

Giorgio Leali, Elisa Braun and Jakob Hanke Vela contributed reporting.

This article is part of POLITICO’s premium policy service Pro Trade. From transatlantic trade wars to the U.K.’s future trading relationship with the EU and rest of the world, Pro Trade gives you the insight you need to plan your next move. Email pro@politico.eu for a complimentary trial.