McKinsey & Company

MGI Minute: Geopolitics and the Geometry of Global Trade: 2026 Update

The McKinsey Global Institute’s 2026 update, presented by senior fellow Tiago Devesa, examines how global trade performed amid the largest tariff shock in a century. Despite heightened protectionism, total trade volume still grew faster than the world economy in 2025. AI‑related equipment accounted for roughly one‑third of that growth, as data‑center chips and servers relied on sprawling cross‑border supply chains. China also pivoted, shipping more industrial intermediate inputs and positioning itself as a “factory for factories.” Meanwhile, tariffs redirected flows away from the traditional US‑China corridor, leaving basic sectors such as textiles lagging, while resource trade remained volatile due to fluctuating commodity prices. Devesa notes, “Every year shocks like tariffs ripple through the global network, but underneath the surface it’s the deep economic transformation waves that often play the largest role.” The chart he references illustrates sector‑level contributions, highlighting AI’s outsized impact and the mixed performance of advanced manufacturing versus basic goods. The analysis suggests that policymakers and corporations should prioritize long‑term technological and supply‑chain shifts over short‑term tariff battles, as these structural forces will shape trade patterns and competitive advantage in the coming decade.