Trade Rebuilding In Age Of De-Globalisation

For many years, globalisation was the golden thread weaving through the world’s economies. However, in the wake of the pandemic, we’ve seen a shift towards economic nationalism, trade barriers, and strategic reshoring—a whole new era.

This shift, often referred to as de-globalisation, is quietly yet dramatically reshaping global commerce. The change didn’t happen overnight. It all started with the U.S.-China trade war, gained momentum during Brexit, and really took off during the COVID-19 lockdowns and Russia's invasion of Ukraine.

Each of these events highlighted just how vulnerable and overly dependent our global supply chains had become. In response, many countries began to "friendshore" or "nearshore" their manufacturing, moving production closer to home or to partners they align with politically.

A recent analysis from the OECD suggests that global trade growth in 2025 will be under 3 per cent, a significant drop from the pre-2010 average of 5-6 per cent. Additionally, in the past three years, foreign direct investment (FDI) has plummeted by over 30 per cent in several key manufacturing hubs.

For multinational companies, resilience is now more important than efficiency, leading them to seek backup suppliers, build local inventories, and automate processes to reduce reliance on foreign sources. But this is an evolution rather than a conclusion for globalisation. We are witnessing the emergence of regional trade groups and multi-polar economic zones in place of a completely linked world.

Examples of how countries are reorienting trade priorities are the US-Mexico-Canada Agreement (USMCA), the European Union's Green Deal and CBAM, as well as China's Belt and Road Initiative. Opportunities abound but also risks abound during this reconstruction period. Countries quite dependent on exports—like Germany or South Korea—must move fast. Emerging countries could gain from their compatibility with re-shoring policies.

If protectionist measures intensify, nevertheless, the world might experience slower global development, lower invention, and prolonged inflation. Global trade is being redesigned rather than collapsing. For companies and legislators, the goal is to strike a new balance: one that safeguards national interests without falling back into seclusion.

Resilience is the modern economy currency in an unstable world.