Geopolitics and the geometry of global trade: 2026 update

McKinsey & Company

Research

59 Pages

McKinsey documents the emerging realignment of trade along geopolitical lines and examines how these dynamics evolved in 2025. It traces the way tariffs rippled through the network alongside major waves influencing trade, such as AI and emerging market growth.

Source: McKinsey
Source: McKinsey

Key Takeaways

No Retrenchment in 2025: Trade grew faster than the global economy, while advanced economies and China reoriented away from geopolitically distant trading partners.
AI-related Trade: Exports of semiconductors and data-center equipment accounted for one-third of global trade growth as Asian hubs—Taiwan, South Korea, and parts of Southeast Asia—supplied markets around the world, particularly the United States.
US-China: Tariffs triggered trade readjustment, with US–China trade falling by around 30%. The United States replaced about two-thirds of the gap with imports from other sellers, while Chinese exporters of consumer goods from electric cars to toys cut prices by an average of 8% to find buyers in new markets.
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