The future of global trade? Introducing the trade patchwork model

Despite this year’s headlines, global trade has not collapsed; it is, however, in transition. The rise of economic nationalism and fragmentation of global institutions – long-forming trends – continue to gather pace.

In this volatile context, predicting the future of trade is scenario-based and not definitive. Boston Consulting Group sees several possible future scenarios for global trade that can help companies pressure-test their business decisions.

The good news is we have not yet seen a retaliatory tariff escalation situation. Momentum toward either extreme – all-out tensions versus a return to a rules-based global trading system – has slowed. Instead, we see a more moderate and plausible scenario emerging that we’re calling a multi-nodal trade patchwork, a model that allows for continued trade growth and competitive advantage for businesses that can navigate the complex dynamics.

In this trade patchwork scenario four major nodes emerge:

In 2034, in a trade patchwork reality, these are the critical takeaways we see for the global goods trade:

1. Despite tariff changes and other disruptions to trade, overall global trade would remain remarkably resilient, expanding by around 2.5% annually (slightly above GDP). The routes many goods travel will, however, change.

2. The plurilateralist group as a whole would see above-average trade growth among themselves and most of the Global South through 2034.

3. China’s goods trade would grow faster than the US, but more slowly than the global average. China will deepen ties with the Global South, including the other BRICS+ nations. They have already become the top trade partner to nearly half of the Global South.

4. The US’ share of the global goods trade would decline as it focuses on narrowing its trade deficit and increasing domestic production; its trade is projected to grow by only around 1.5% annually, though this may not translate into a corresponding impact on GDP.

5. Trade would continue to grow among the nations of the Global South.

A trade patchwork scenario would have major implications for business leaders and policy-makers. In this scenario, leaders with the right strategies and capabilities will not only secure resilience, but also facilitate growth. Business leaders can succeed by:

Policy-makers, for their part, will need to:

After a year of extraordinary disruption, one thing is clear: globalization isn’t over, but it is evolving. No crystal ball can predict developments and outcomes, but scenarios are valuable tools for global leaders who cannot afford to wait and see how the trade landscape unfolds.

This trade patchwork scenario would be more complex and costly than the old rules-based system and will require deeper trade compliance capabilities. Yet, it will still reward agility and foresight. The winners will be those who learn to navigate the dynamics among these trade nodes to their advantage and develop the resilience needed to capture new opportunities as they emerge.