From World War Trade to Domino Regionalism: The Emergent Global Trading Order

Why It Matters

The shift to a multi‑hub, rules‑based trading architecture reshapes market access, compliance costs, and geopolitical risk for businesses worldwide.

Key Takeaways

• 2025 US-China tariffs sparked global trade disruption
• 75% of world trade nations chose containment, avoiding wider war
• Domino regionalism drives rapid RTA formation across continents
• EU and CPTPP become primary trade hubs post‑2025
• Firms push for interoperability, limiting fragmentation risk

Pulse Analysis

The abrupt imposition of sweeping tariffs by the United States in April 2025, followed hours later by China’s blanket export controls on high‑tech inputs, marked a historic escalation that scholars now label a ‘World War Trade.’ While the United States and China locked horns, the remaining 75 % of global trade—countries that together account for three‑quarters of merchandise flows—adopted a containment strategy, keeping the conflict from spiralling into a full‑scale trade war. The episode exposed the fragility of the post‑World‑II rules‑based system that had been anchored by American leadership, setting the stage for a new architecture.

That new architecture is emerging through what economists call the domino theory of regionalism. When a bloc lowers internal barriers, outsiders face discrimination, prompting them to seek membership; each accession amplifies the bloc’s pull, creating a self‑reinforcing cascade. Since 2025, the pace of regional trade agreements (RTAs) has accelerated: the EU closed landmark deals with Mercosur and India, each worth over $100 billion, while the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) expanded its network. Parallelly, shallower arrangements such as ASEAN’s tariff‑focused pact and a wave of bilateral accords from the UK, India, and Gulf states have stitched together a multi‑hub trading system.

For multinational corporations, the shift from a single US‑centric hub to a solar‑system of regional hubs means navigating multiple rulebooks that increasingly converge on common standards. Supply‑chain managers will prioritize jurisdictions whose regulations align with EU or CPTPP norms to preserve interoperability, reducing the risk of fragmentation. Policymakers, meanwhile, must balance national interests with the commercial pressure for coherence, fostering deeper integration without a dominant hegemon. If the domino effect sustains, the emerging order could deliver the predictability and market access that businesses crave, while diffusing geopolitical risk across a diversified network of trade partners.