World trade: the Great Decoupling?

I n October 2023, we published a study on the transformation of the international trade . This time , we present stylized facts confirming the evolution of global trade relations, particularly the fragmentation of trade flows influenced by increasing geopolitical tensions and industrial policies aimed at enhancing the resilience of supply chains. The latest observations and projections corroborate the relative weakening of international trade, a phenomenon that has been underway since the early 2000s. However, the data do not indicate a significant break in the relationship between trade and GDP growth , even in a context marked by the proliferation of measures unfavorable to the former. Nonetheless, the year 2024 confirmed the trends initiated over the previous two years, with a greater concentration of trade among institutional groups with common economic and political interests. The reorientation of trade for the United States and the EU reveals remarkable dynamics, characterized by a heterogeneous decoupling, particularly from China. Despite a decrease in trade with China, the U.S. dependency ratio on this country remains significantly higher than that of Europe . Regarding trade relations between the U.S. and Europe, a rapprochement has been observed. Transatlantic trade relations have strengthened, despite geopolitical tensions, with an increase in bilateral trade. In this report, we also highlight the growing role of certain countries (connector countries) that establish trade links between opposing blocs. Despite positive short-term signals, major challenges remain. An increase in fragmentation is likely if geopolitical tensions persist and/or intensify . In this regard, the upcoming U.S. elections on November 5 are a determining factor; a second term for D. Trump would likely lead to an acceleration of fragmentation and a weakening of trade. Similarly, the EU's now more defensive trade policy is also expected to contribute to this trend. Finally, the recent period is also characterized by an increase in certain foreign direct investments (greenfield FDI), which notably reflects the reshoring of value chains. While this may be a response to rising trade and geopolitical tensions—rather positive for the dynamics of global trade—it can also reinforce fragmentation. .