Global trade could be entering fundamental reorientation

Defying pessimistic forecasts and a sharp escalation in tariffs, global trade is undergoing a profound geopolitical realignment, with AI emerging as its most powerful engine of growth.

- By Hazy Tran

The “Geopolitics and the Geometry of Global Trade: 2026 Update” report released by McKinsey Global Institute last week found that global trade is undergoing a profound structural realignment.

While traditional alliances have come under strain, the data suggests that trade flows are increasingly shifting towards more geopolitically aligned economies, even as overall trade continues to expand in tandem with global output.

“Trade in 2025 did not retrench, despite widespread expectations of a pullback. Both US imports and Chinese exports reached new historical highs, while Southeast Asia and India further solidified their positions in the global manufacturing hierarchy,” noted the report.

A key driver of resilience was not traditional manufacturing, but physical infrastructure supporting the digital economy. According to McKinsey, AI-related trade has emerged as the key engine of growth, with shipments of semiconductors and data centre equipment accounting for roughly one-third of total global trade expansion over the past year.

As the US added approximately half of the world's new data centre capacity in 2025, demand for advanced logic chips and networking hardware surged, supported by a tightly integrated supply chain spanning Taiwan, South Korea, and parts of Southeast Asia.

“AI hardware trade grew by nearly 40 per cent, far outpacing the global goods market, which expanded by just 6.5 per cent. This has created a highly specialised and resilient corridor of high-tech trade, largely insulated from broader protectionist pressures,” noted McKinsey's experts.