Navigating trade in 2026: 5 strategic shifts in business decisions

The post-pandemic era was expected to catalyse a new wave of resilience.

Yet the geopolitical and trade disruptions of 2025 have revealed that resilience alone is insufficient. What is required now is readiness: the ability to anticipate, adapt and act decisively in a power-based global economy.

Drawing on interviews with senior executives from over 20 multinational corporations across Asia and Europe in 11 sectors, it is evident that strategic shifts are emerging. These shifts are redefining how business leaders respond to a world shaped by dual supply and demand shocks, where geopolitical strategy is no longer peripheral but central to competitive advantage.

The most visible response to geopolitical disruption has been the restructuring of supply chains. The traditional globalized model, built on just-in-time logistics and cost optimization, is being replaced by regionalized, "local-for-local" configurations. This reflects a strategic reorientation toward agility, resilience and geopolitical insulation.

Firms are moving to decentralize production, diversify supplier bases and build modular manufacturing capabilities. These changes mitigate tariff exposure, hedge currency risk and enable rapid reallocation of production in response to shifting trade conditions. Several firms have adopted asset-light models, allowing them to scale or relocate operations dynamically.

One leader described their approach as "the Uber of manufacturing" – a flexible network of production nodes.

Agility is viewed as a strategic differentiator. However, the nature of this transition is uneven; large firms are better positioned to restructure, while small and medium-sized enterprises (SMEs) often lack the financial flexibility and strategic bandwidth to diversify quickly.

Furthermore, leaders see opportunity in this crisis, as localized operations align with sustainability goals and reduce carbon footprints, making this shift a strategic enabler of long-term competitiveness.

Geopolitical dynamics are now a primary driver of capital expenditure (capex) decisions. Tariffs affect not only final goods but also inputs, prompting companies to reassess where and how they invest with emphasis on geographic reallocation.

Executives reported accelerating investments in US-based production capacity, driven by the need to mitigate tariff exposure and secure market access. South-East Asia and India have also emerged as preferred destinations for diversification.

The response is not uniform. A few companies are taking a contrarian approach by pausing investments in the US due to concerns about volatility and destabilization, and reallocating capital to Europe or intra-Asian markets – betting on more stable environments.

The overall volume of capex remains steady, but its geographic distribution is shifting dramatically. Leaders are prioritizing agility, asset readiness, and regional resilience over scale. For SMEs, the challenge is more acute; several executives emphasized the need for targeted (public-private) support programmes to help them navigate this new landscape.

Mergers and acquisitions (M&A) are being reimagined as strategic tools for resilience, diversification and capability-building. In a fragmented global economy, M&A offers a pathway to expand regional footprints and secure access to critical skills and markets.

Executives described a shift towards "matchmaking optimization", where M&A is not just used for scale, but for strategic alignment. This includes acquiring firms with complementary capabilities, regional presence, or geopolitical insulation. The emphasis is on building future-ready portfolios that can withstand volatility.

Execution is becoming more cautious. Due diligence now includes geopolitical risk assessments, scenario planning, and long-term value modelling to future-proof the business against systemic disruption.

Strategic partnerships and joint ventures are also gaining traction offering flexibility, shared risk, and faster market entry. This evolution reflects a broader recognition: resilience is increasingly built through external collaboration.

Enterprise Risk Management (ERM) is undergoing a fundamental transformation. Traditional models based on probability estimates are proving inadequate against interconnected external crises. Executives described a shift towards scenario planning, where the focus is on understanding the impact of disruptions rather than predicting their likelihood. This calls for cultural transformation and a distributed ownership of risk across the organization.

Geopolitical risk is now a standing item on boardroom agendas. Companies are developing heat maps to quantify exposure, using AI-powered tools to simulate disruption pathways, and embedding "what-if" analyses into strategic planning. This enables preparation for low-probability, high-impact events, often referred to as "Black Swan" scenarios.

ERM is no longer merely a compliance function, but a strategic enabler of competitiveness. By following the practical guidance in this white paper, companies can build geopolitically agnostic business models. Uncertainty is viewed as a strategic advantage for firms that can offer flexibility and scenario-based solutions.

The most profound shift is occurring at the level of corporate governance. Boards of directors are being called upon to play a more active, strategic role in navigating geopolitical uncertainty, replacing the traditional cadence of passive oversight.

Boards are increasingly involved in key strategic decisions, from capex allocation to supply chain resilience.

To meet these demands, companies are rethinking board composition. There is a growing demand for non-executive directors with expertise in geopolitics, crisis management and international trade. Equally important is cultivating a conflict-tolerant discussion culture.

The rise of "geobusiness" – the integration of geopolitical strategy into core operations and governance – is now seen as a structural reality. Boards must evolve from oversight bodies to strategic partners, guiding organizations through uncertainty with foresight, agility and conviction. This board stewardship includes:

The global business environment is shaped by fragmentation, volatility and power-based competition. Resilience is necessary, but readiness is essential. The successful firm of the next decade will be one that embeds geopolitical strategy into its DNA and leads with agility, foresight and boldness.

The World Economic Forum’s Trade, Geopolitics and Industrial Policy initiative is actively working on these opportunities, with a focus on actionable insights for shaping business strategy and designing future-fit trade cooperation mechanisms. It offers a trusted space for decision-makers to navigate geopolitical headwinds. The Forum’s Global Future Council on International Trade and Investment brings together leading experts to develop solutions for a resilient and sustainable global trade ecosystem.