Global commerce is surging to unprecedented heights in 2025, even as its geography and power structures undergo profound transformation. New alliances, fragmented supply chains, and industrial policy are reshaping how countries buy and sell.

Riding the Wave of Record Trade

According to UNCTAD’s Global Trade Update, world trade is poised to exceed USD 35 trillion in 2025 for the first time. That marks roughly 7% growth for the year, adding around USD 2.2 trillion in value.

This boom is volume-driven trade growth: after years of high prices inflating figures, a projected drop in costs means the rise is fuelled by sheer quantities shipped across oceans and borders.

• Goods trade contribution: USD 1.5 trillion added.
• Services trade contribution: USD 750 billion added.
• East Asia exports up 9%, intra-regional trade up 10%.
• Africa imports up 10%, exports up 6%.
• South–South trade expansion: 8% growth.

Manufacturing remains the growth engine, up 10% year-on-year, driven by electronics surging 14% amid AI-related demand. Agricultural exports, especially cereals and fresh produce, jumped 11%, while automotive and fossil fuel shipments softened.

Looking ahead, UNCTAD warns of weaker trade growth in 2026 due to slower global activity, rising debt, and geopolitical uncertainty. The IMF forecasts global GDP growth easing from 3.3% in 2024 to 3.1% by 2026, suggesting emerging markets will shoulder more of the trade expansion.

Resilience in the Face of Restrictions

Between 2023 and 2025, the number of new trade restrictions worldwide hit record highs, reversing decades of liberalisation. In the first ten months of 2025 alone, over 2,500 measures were imposed—nearly five times the total in 2015.

Trade policy uncertainty in the 2020s stands at almost five times the level of the 2000s. Yet goods trade volumes grew at a 4.7% monthly rate through August 2025, rebounding from a 0.7% contraction in 2023 and accelerating from 2.7% in 2024.

Front-loaded imports ahead of tariff hikes helped avert sharp contractions, though leading indicators like PMI new export orders slipped into contractionary territory by April 2025, signaling potential cooling once those effects fade.

Fragmentation and the Rise of Friendshoring

A decade-long build-up of trade restrictions has been supercharged by recent tariff hikes and tit-for-tat measures among major economies. This is driving geopolitical fragmentation of trade, where strategic alignment and security now weigh as heavily as cost efficiency.

In this environment, friendshoring and nearshoring have surged in 2025, with firms redirecting supply chains toward politically aligned or geographically closer partners to bolster resilience.

Many nations are reorienting trade toward trusted allies, but China stands out by broadening its export network across diverse markets. At the same time, “connector countries” like Vietnam and Mexico are emerging as hubs—facilitating rerouted flows and helping firms circumvent tariffs and political risk.

Forging New Alliances and Trade Blocs

As global trade fragments, new agreements are stepping in to fill the vacuum, creating high-standard rulebooks within like-minded blocs.

The CPTPP continues to attract new applicants, reinforcing a Pacific-centered trade axis. Meanwhile, the African Continental Free Trade Area, effective since 2019, now unites 55 countries under a single market vision—an emblem of South–South integration and intra-African growth.

However, fragmented rule-setting on digital data, green goods, and subsidies risks overlapping regimes—creating a complex compliance landscape for multinational firms.

Decoupling and the U.S.–China Divide

New U.S. tariffs announced on “Liberation Day” April 2, 2025, have reshaped expectations. The average U.S. import tariff on China now hovers at 39%, down from a 103% peak but well above the 13% rate before recent measures.

Allianz Trade estimates global export losses of USD 305 billion in 2025 due to this trade war. Business sentiment swung dramatically: positive export expectations fell from 80% before April 2 to just 40% after. Now, 42% of firms foresee export drops of 2–10%, up from 5% previously.

Companies are diversifying partners, reconfiguring logistics, and embedding risk-sharing across value chains. U.S. exporters to China and East Asia halved their intentions to 10%, while Chinese firms’ plans to ship to North America plunged from 15% to 3%.

Despite decoupling, European exporters are ramping up ties with Asia—export intentions to China and Asia climbed to 36%, and interest in South & Southeast Asia doubled to 14%. Latin America has become a “quiet winner,” attracting both Chinese and European firms seeking cost-effective access to the U.S. market.

Charting a Course Through Uncertainty

Today’s turbulent trade landscape demands both bold vision and practical tactics. Nations, businesses, and investors must:

• Diversify supply chains across trusted partners.
• Invest in digital infrastructure and sustainable logistics.
• Monitor evolving trade agreements and regulatory regimes.
• Forge strategic alliances that balance cost and resilience.

By embracing innovative industrial policies and agile management, stakeholders can transform fragmentation into opportunity. The shifting sands of global trade, though fraught with challenges, also reveal pathways to growth—if we navigate them strategically and collaboratively.