The New Geometry of Trade: How Leaders Can Respond to Structural Shifts

Why It Matters

Understanding the new trade geometry enables firms to adapt supply chains, capitalize on AI‑driven opportunities, and navigate geopolitical risk, directly impacting profitability and resilience.

Key Takeaways

• Global trade grew faster than economy despite geopolitical volatility.
• Trade is rewiring toward geopolitically aligned partners, not regionalizing.
• AI now drives ~7% of trade, contributing one‑third of growth.
• China shifts to exporting intermediate goods, fueling global south factories.
• ASEAN economies act as supply‑chain matchmakers, linking US and China.

Summary

The McKinsey Live session titled “The New Geometry of Trade” examined how shifting geopolitical dynamics, tariff shocks and emerging technologies are reshaping global commerce in 2026. Speakers Shubham Singhal and Jeongmin Seong highlighted that, contrary to de‑globalisation narratives, total trade expanded faster than the world economy, with new agreements such as India‑EU and EU‑Mercosur coming online.

Key insights included a “rewiring” of trade toward geopolitically aligned partners rather than simple regionalization, AI now accounting for roughly 7% of total trade and driving one‑third of its growth, and China’s pivot from final‑goods exports to a surge in intermediate‑goods shipments that empower factories in the Global South. ASEAN economies emerged as critical matchmakers, posting double‑digit export and import growth while linking U.S. demand with Chinese supply.

Notable data points underscored the depth of change: only about 5% of U.S. imports are both critical, concentrated, and sourced from aligned nations; AI‑related trade contributed a third of 2025’s trade expansion, with the U.S. building half of new data‑center capacity; China recorded a record trade surplus despite tariffs, with intermediate‑goods exports up 9%; and ASEAN’s export growth was 14% in 2025, driven largely by the United States.

For business leaders, the implications are clear: persistent policy uncertainty demands continuous reassessment of supply‑chain footprints, investment in AI‑enabled logistics, and strategic engagement with emerging “connecting” economies. Aligning trade strategies with geopolitical realities will be essential to capture growth while mitigating risk in an increasingly volatile environment.

Original Description

The new geometry of trade: How leaders can respond to structural shifts