The current outlook
Global trade is projected to hit a record
high in 2025, exceeding $35 trillion for the first time, marking a 7% increase
($2.2 trillion) over 2024 levels, notes UN Trade and Development (UNCTAD). Growth is driven by a
nearly 9% surge in services and robust goods trade, particularly in AI-related
electronics and manufacturing, despite increased geopolitical tensions and
protective trade policies. Dec. 2025 https://unctad.org/publication/global-trade-update-december-2025-global-trade-poised-record-breaking-2025-flows
The WTO forecasts a rise in world merchandise trade volume growth
for 2025, followed by a decline in 2026. World merchandise trade volume growth
is projected at 2.4% for 2025, up from 0.9% in August. The forecast for 2026
has been downgraded to 0.5%, down from 1.8%.
From https://www.wto.org/english/res_e/publications_e/gtos1025_e.htm
and global economic growth
The global economy has shown
resilience, but the outlook remains clouded by trade tensions, fiscal strains
and persistent uncertainty. Growth
is expected to slow to 2.7% in 2026, below 2025 levels and the pre-pandemic
average, as subdued investment and structural headwinds weigh on momentum
despite easing inflation and monetary loosening.
Some terms
and issues:
‘Slowbalization’ after the global financial crisis of 2008 https://www.imf.org/en/blogs/articles/2023/02/08/charting-globalizations-turn-to-slowbalization-after-global-financial-crisis
Deglobalization, which so far hasn’t
happened in terms of a real decline in global trade but may be interpreted as a
kind of decoupling in favour of greater regionalization.
https://yalebooks.yale.edu/2023/10/26/its-not-deglobalization-its-regionalization/
‘Reglobalization’ today? https://www.weforum.org/stories/2026/01/reglobalization-world-economy-growth/
Nearshoring, friendshoring and
reshoring (sfter earlier outsourcing or offshoring) https://www.allianz-trade.com/it_IT/news-e-approfondimenti/community/business-tips/la-nuova-forma-delle-attivita-commerciali.html
https://leap.luiss.it/wp-content/uploads/2025/09/WP5.25-Reshaping-global-value-chains.pdf
https://www.prialto.com/blog/offshoring-vs-outsourcing
The Chinese
economy https://www.fitchratings.com/research/sovereigns/chinas-domestic-demand-weakness-to-limit-growth-to-4-1-in-2026-22-01-2026
Huge trade surplus
https://www.chathamhouse.org/2025/12/chinas-record-1-trillion-plus-trade-surplus-shows-renminbi-should-be-allowed-appreciate
US trade
restrictions
challenges and
trends in 2026
some definitions
outsourcing https://en.wikipedia.org/wiki/Outsourcing
offshoring https://en.wikipedia.org/wiki/Offshoring
nearshoring https://en.wikipedia.org/wiki/Nearshoring
supply chain
security https://en.wikipedia.org/wiki/Supply_chain_security
supply chain diversification https://en.wikipedia.org/wiki/Supply_chain_diversification#:~:text=Supply%20chain%20diversification%2C%20within%20the,of%20products%20into%20the%20market.
file:///C:/Users/Pc/Downloads/the-state-of-european-supply-chains-survey-2024.pdf
The US and EU – reshoring, friendshoring, nearshoring
and securing supply chains
https://blog.qima.com/europe/nearshoring-trends-europe-vs-us
Protectionism and
responding to it https://www.investmentmonitor.ai/features/protectionism-likely-to-continue-rising-in-2025/#:~:text=Protectionism%20is%20expected%20to%20increase%20in%202025.,on%20edible%20oils%20from%205.5%25%20to%2027.5%25
https://www.theguardian.com/business/article/2024/jun/11/protectionism-growth-poverty-world-bank
Can we have global
economic growth and tackle climate change at the same time?
https://globalcarbonbudget.org/fossil-fuel-co2-emissions-hit-record-high-in-2025/
Investment
https://unctad.org/publication/world-investment-report-2025
https://www.amundi.com/institutional/article/global-investment-views-january-2026
and productivity
https://www.laufg.com/blog/the-productivity-advantage-powering-economic-growth-in-2026
using automation,
data‑driven decision tools, and other technologies that raise output per hour.
Many industries have further to go to increase artificial intelligence (AI)
adoption rates.
The EU economy https://commission.europa.eu/news-and-media/news/eu-economy-projected-moderately-grow-amid-global-economic-uncertainty-2025-05-19_en
It needs to be
more competitive and achieve higher productivity
https://www.europarl.europa.eu/RegData/etudes/BRIE/2026/774677/EPRS_BRI(2026)774677_EN.pdf
https://www.atlanticcouncil.org/dispatches/can-europe-finally-deliver-on-competitiveness/
EU trade agreements
https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/negotiations-and-agreements_en negotiations or ratification ongoing or
an agreement in place
Mercosur and
Mexico agreements https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1644
important
examples https://ec.europa.eu/trade/policy/in-focus/eu-japan-economic-partnership-agreement/
https://ec.europa.eu/trade/policy/in-focus/ceta/
http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx
https://www.wto.org/english/tratop_e/region_e/region_e.htm
https://www.youtube.com/watch?v=ehxv-Zkkig4
https://www.euronews.com/business/2026/02/13/eurozone-trade-ends-2025-with-a-126bn-surprise-surplus
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5742
https://ec.europa.eu/commission/presscorner/detail/en/ip_25_2569
EU
restrictions on trade with Russia and the costs involved
G7 support
for Ukraine
https://g7.canada.ca/en/news-and-media/news/g7-finance-ministers-statement
US trade
restrictions and tariffs
As of early 2026, U.S.-EU trade is
in flux following a July 2025 deal that established a 15% tariff ceiling on
most European goods. However, the U.S. Supreme Court ruled these tariffs
illegal in February 2026, leading to ongoing "tariff chaos" and
potential suspension of the deal. Key issues include US restrictions on
European steel, aluminum, and potential tech sanctions.
The 2025 Deal and 2026 Legal
Challenge: The 2025 agreement aimed to set a 15% tariff on most EU goods,
including cars, to address trade imbalances. Following the Feb 2026 Supreme
Court ruling against these tariffs, the future of this agreement is uncertain.
Sector-Specific Restrictions:
Steel/Aluminum: The U.S.
implemented tariff rate quotas for EU steel and aluminum, maintaining50% duties
on some products to protect domestic industry.
Automobiles: While part of the
15% ceiling negotiations, autos and parts faced significant restrictions and
potential retaliatory tariffs.
Tech & Digital
Services: The U.S. has threatened tariffs on European companies in
response to EU digital regulations, which the U.S. considers discriminatory
against its tech firms.
"Buy American"
Policy: Existing restrictions under the Buy American Act threaten
to further limit European access to U.S. government procurement, specifically
in the defense sector.
Impact on Trade
Reduced Exports: EU exports to
the U.S. dropped by 15% by value in late 2025, largely driven by the tariff
changes.
Investment Demands: The U.S.
pressured the EU to invest $600 billion in the American economy.
The situation remains volatile, with
potential for further retaliatory measures from the EU if the U.S. pursues
further protectionist policies
Impact of the
Ukraine war on markets
The immediate impact of the invasion
was a sharp rise in commodity prices and severe equity price
declines that mainly affected Russian markets.
Other trade
agreements
The
RCEP:
https://en.wikipedia.org/wiki/Regional_Comprehensive_Economic_Partnership
The CPTPP:
https://it.wikipedia.org/wiki/Comprehensive_and_Progressive_Agreement_for_Trans-Pacific_Partnership
The EU and
China
‘The EU sees China as a partner for cooperation,
an economic competitor and a systemic rival. However, EU-China relations
have become increasingly complex due to a growing number of irritants. China
has become less open to the world and more repressive at home, while taking a
more assertive posture abroad, resorting to economic coercion, boycotts of
European goods, and export controls on critical raw materials.’
from https://www.eeas.europa.eu/eeas/eu-china-relations-factsheet_en
These notes
go with the longer older articles on globalization (Chained to
Globalization/Why Globalization Stalled/Globalization’s Wrong Turn) that will
be in the Dropbox.
And here is some
more background and events 2019-23 if you need it:
The global economy was hit by the Covid-19 pandemic in
2020 and although some of the recent trade barriers were later removed by the
Biden administration Covid-19 trade restrictions had to be put in place. This
exposed global supply chains to delays, disruptions and interruptions.
https://www.wto.org/english/news_e/pres19_e/pr840_e.htm
https://www.nytimes.com/2019/10/01/business/wto-global-trade.html
However, many
countries tried to reach new free trade agreements to boost exports while being
forced to adopt a series of Covid-19 trade restrictions, e.g. on transport and
travel.
https://www.wto.org/english/news_e/news19_e/trdev_21nov19_e.htm
https://www.wto.org/english/news_e/news20_e/trdev_11dec20_e.htm
https://www.wto.org/english/news_e/news21_e/trdev_28oct21_e.htm
Russia’s invasion of Ukraine on
24 February 2022 led to trade
sanctions on Russia and retaliation by Russia in the form of gas and oil price
rises. Western countries responded by seeking diversification of suppliers and
resources (more investment in the development of green energies and a greater
reliance, at least in the short term on coal and nuclear power).
And now some notes
towards an essay!
Globalization refers to the increasingly global interconnectedness of cultures,
people and economic activity.
https://www.piie.com/microsites/globalization/what-is-globalization
Most
often, it refers to economics: the increasingly
global distribution of the production of goods and services, through reduction
in barriers to international trade such as tariffs,
export fees, and import quotas (as well as invisible
barriers such as complex and slow bureaucracy), and the transfer of such goods
and services to consumers. It also involves the freer movement and circulation
of workers around the world, delocalization or outsourcing (relocation of
factory and service providers from one country to another – see ‘Outsourcing’
and’ Offshoring’) and glocalization of products and services. Globalization
contributes to economic growth in developed and developing countries through
increased specialization and the principle of comparative advantage.
All this helps to lower the price of goods and thus benefits the
consumer and raises the standard of living. Globalization of financial markets
makes money available at low interest rates for investment across the world
(the
circulation
of capital to where, in theory, it can best be invested).
The rapid
increase in the process of globalization was the result of a number of factors:
the end of the Cold War and the end of the relative isolation of countries like
Russia, the old Warsaw Pact states and China, and their integration into the
global trading system; the work of the World Trade Organization to eliminate or
reduce trade barriers; the work of the World Bank, which is a lending
institution whose aim is to help integrate countries into the wider world
economy and promote long-term economic development; the work of the International
Monetary Fund which aims to promote global monetary cooperation and financial
stability and thus support trade; developments in transport technologies,
infrastructure and procedures and thus reductions in transport costs, e.g.
container ships and ports, low-cost airlines; developments in Information and
Communications Technologies (ICTs) that facilitate trade, e.g. the internet,
cell phones and satellite technologies. In many ways, this is all in line with
the old Functionalist theory of international relations.
Many supporters
of globalization argue(d?) that it also promotes peace and cooperation. In the
1960s and’70s there was very little trade between the West and the Communist
bloc. In the 1990s the level of trade between, for example, the US and China or
the EU and the Russian Federation was expanding rapidly, and it was difficult
to imagine how such trading partners could become involved in a general
conflict without seriously damaging their own economies. However, the start of
the war in Ukraine, the sanctions that followed and the increased tensions with
China have made the claim that globalization fosters peace seem much less
convincing.
The
countries that gain least from globalization will be those least integrated
within the global trading system, either by choice (by political decision and
the maintenance of strong trade barriers) or through a lack of the necessary
infrastructure (e.g. ports, airports and roads), or know-how and expertise, or
technology, or an adequate industrial base or a secure business environment
(e.g. failed or partially failed states or states with high levels of
corruption, bureaucracy, red-tape and insecurity of ownership or the absence of
the rule of law due to weak governance or civil war).
The term
globalization can also refer to the transnational circulation of ideas,
languages, and popular culture, particularly via the internet and
social media or on satellite TV across political borders. Many Western
political commentators identify its most positive effects in the spread of
democratic and human rights values at a grass roots level, a phenomenon which
authoritarian regimes may find difficult to control. Paradoxically, cultural
globalization in this sense may actually lead to tension and political
instability, at least in the short term, as the rapid changes which have taken place
in the Arab world (the Arab Spring) and around the globe demonstrate (e.g. the
street protests in Lebanon, Iran, Iraq, Hong Kong, Venezuela and Chile and
government repression). Moreover, globalization may lead to a mixing of
cultures and an enriched, more vibrant multicultural society. This is an
important factor both for the EU and for a city like New York.
Globalization
also means the growing role of international organizations, both global and
regional, like the UN, the WTO, the IMF or the EU and AU, given the diminishing
ability of nation states to confront their problems alone – problems which are
now often global challenges requiring international cooperation at an ever-increasing
level e.g. climate change, a financial crisis, a pandemic and migration.
However, critics
of globalization make a series of points:
Globalization
encourages competition to lower prices. This can damage developed economies
with strong social welfare systems which find themselves in competition with
countries like China where social welfare costs for companies are relatively small
(or non-existent in some very poor countries), and overheads may also be
relatively low. Many Europeans commentators would now argue that this aspect of
globalization outweighs the benefits to Western consumers of low-cost goods
because European companies may be unable to compete and close, or move their
factories and other production facilities abroad where costs are lower
(offshore), or outsource part, or all, of the production process to foreig
companies located in low-cost areas. This will lead to more unemployment in the
developed economies. They call for trade sanctions and limits on countries like
China until those countries provide their own workers with adequate health
care, education and pensions. The freer movement and circulation of workers
around the world has also been criticized as leading to a decline in salaries
as workers from the host state compete with migrants (often willing, or forced,
to work at lower pay rates and usually less organized in terms of unions), and
a rise in social tensions between these two groups. There may also be rising
friction due to cultural and linguistic differences.
Further
criticisms in this field concern the risk of increased threats to security, and
from terrorism and epi- or pandemics. The greater volume of trade makes it
difficult for the customs authorities to effectively check the goods being
transported and this has, it is argued, made illegal trafficking in drugs,
arms, organs and human beings easier. The same argument is made for the
increased number of people moving across borders.
The Covid-19 pandemic and the war in
Ukraine led to delays and interruption in global supply chains and to a
rethinking of the whole question of globalization. Many companies, countries
and groups, including the EU, NATO, their democratic allies and other groups
have adopted a two-fold strategy: continuing to seek free-trade agreements with
reliable partners while at the same time prioritizing security, diversification
of supplies (e.g. new green energy sources) and suppliers (gas and oil via
Tunisia from Algeria for Italy) and regionalization (a shortening of supply
chains) instead of always prioritizing short-term efficiency in terms of
comparative advantage and the lowest price available globally. They want to
prioritize economic security and avoid over-dependence on supplies that may be
interrupted by an event like the Covid-19 pandemic, and on suppliers who may
use supplies as an economic or political weapon by imposing price hikes or
reducing or cutting of supplies. All of this was stated very clearly by Christine
Lagarde, as President of the ECB in April 2022
https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220422~c43af3db20.en.html
(this is also good for note-taking on language items!)
This has led
to trends like ‘reshoring’, ‘nearshoring’ and ‘friendshoring’ moving some
production back to the home country or to a country nearer geographically or
politically allied to, or more reliable for, the home country.
Globalization
is also criticized as producing a tendency towards a global monoculture (Coca
Cola, hamburgers and bland pop music and the destruction of local cultures) and
towards an agricultural monoculture of crops, which threatens small-scale
farmers reduces agricultural biodiversity and could put the world at risk of
sudden reductions in food production due to crop diseases.
Since the
economic recession in 2008 many experts have argued that globalization makes
the spread of a financial or economic crisis more likely because of the
interconnectedness of the world economy, and thus renders the global trading
system less stable, rather than more stable as supporters claim. However, other
economists point out that this interconnectedness is not a new phenomenon as
the Wall Street Crash of 1929 and the Depression of the 1930s demonstrates. In
fact, they argue that today’s global institutions and our awareness of global
economic realities made it possible for countries to react more effectively
this time by adopting common policies rather than pursuing protectionist
policies as happened in the 1930s. However, the globalization of financial
markets and the removal of or reduction in the rules controlling financial and
banking transactions (financial
deregulation) in the 1990s, together with the availability of
credit on easy terms to those who were not really credit-worthy led, in the opinion
of many critics, to a financial culture of irresponsibility based on short-term
gains from the stock market and property markets, and lending to high-risk
borrowers rather than sound, long term investment of this money in industrial
and technological projects and research. This, they say, led directly to the
financial bubble and crisis in the US real estate market (starting in 2007), in
particular the sub-prime mortgage market (but also in the Spanish and Irish
real estate markets). It also allowed too much lending to some states and then
too much speculation against these states and their currencies (e.g. Greece,
Greek Treasury bonds and the Euro) on financial markets. Critics argue that a
distinction should be made between the real economy (the production of goods
and services) where the bankruptcy of even the biggest company will not create
an economic crisis for a government, and the financial sector where financial
institutions may lend on such an enormous scale that should they face
bankruptcy they put the country’s entire economic system at risk. This argument
leads to the conclusion that financial institutions require much stricter
regulation and oversight than other types of companies and that this is still
lacking. Many of the
world's largest and most valuable companies, such as Amazon, Alphabet, and
Meta, are part of the virtual economy as they operate with a virtual-first or
digital-heavy model. This sector now also seems to require some form of
oversight to prevent a speculative bubble that bursts and leads to a global
recession.
Critics
argue that poor countries, particularly small, poor countries with little or no
industrial base, and thus dependent on the export of agricultural produce or
raw materials are under pressure from developed economies and emerging
economies to open up their economies to foreign companies. They may thus be
exploited or face very great fluctuations in the global price of the
commodities that they export.
https://unctad.org/news/commodity-dependence-5-things-you-need-know
This may
prevent them from accumulating enough capital to develop and grow their
economies. It is argued that they may need to protect strategic industries,
with trade barriers and national institutions and management, in the early
stages of the development of these industries, as most developed countries
themselves did (e.g. Italy and Japan) and China still does with technology.
Globalization
has also been criticized for prioritizing global economic growth (in which it
has been very successful) over global issues such as sustainable development,
climate change, deforestation, the reduction in biodiversity and global
warming. A series of conferences (including the UN Climate Change Conference,
COP 21, in Paris in November-December 2015 and COP30
in Belém, Brazil
in November 2025 have attempted to address these issues,
but there is great disagreement among commentators as to the effectiveness of
these conferences and the extent of the real progress made. Some praise the
conferences as a ‘breakthrough’ (the UN) in terms of commitment, while others
see them as too little and too late (many NGOs) and mainly an exercise in empty
rhetoric or hypocrisy.
Cultural
globalization has also been criticized as leading to a dehumanized monoculture
based on materialist and essentially Western consumer values. In this context
we should note the rising criticism, on the more traditional fringes of some
cultures, of international institutions like the WTO, the World Bank, the IMF
and even the UN itself as Western (i.e. ‘foreign’) and imperialist.
Globalization
is criticized as making it more likely that an epidemic will become a pandemic.
The response of most countries to the Covid-19 pandemic was to try to isolate
themselves. However, there has been growing awareness of the need for global
cooperation
https://www.oas.org/fpdb/press/Declaration-AfM-COVID-final.pdf
Finally, it
is said that globalization has also given international criminal and terrorist
organizations more space to operate and these threats to security will require
an ongoing, collective response given the spread of new AI tools.
For more on the EU’s position, see:
Strategic globalization https://www.rand.org/pubs/commentary/2026/01/the-eu-needs-a-plan-for-the-age-of-strategic-globalization.html#:~:text=The%20shift%20has%20not%20been,efficiency%20than%20by%20strategic%20preference.
Very good
https://www.eunews.it/en/2024/02/14/eu-competitiveness-goes-through-free-trade-agreements/
Conclusion –
The Covid-19 pandemic and the war in Ukraine have shown how globalization
exposes countries to potentially fragile global supply chains and
overdependence on a limited range of suppliers and supplies. The EU and many of
its allies and partners are now moving to promote trade deals to achieve diversification
in both areas and a review of their mechanisms and approach to dealing with
globalization. Meanwhile, the EU continues to negotiate trade deals aimed at
liberalization with partners it considers reliable. A re-examination of the
terms of trade between developed, emerging, and developing countries is also
clearly necessary and the goal of ongoing global negotiations. At the same time,
as many of the problems of the 21st century are now on a global
scale, only shared global strategies and cooperation will ultimately succeed in
dealing with them (e.g. climate change and the COP conferences. As Sustainable
Development Goal 17 makes clear, in order to deal with the current economic challenges
faced by developing countries and made worse by climate change, debt levels,
disruptions to trade and population trends, a global partnership will be
necessary. However, critics argue that so far negotiations on global challenges
have produced only modest consensus and even less in terms of practical
results. The Covid-19
pandemic and the war in the Ukraine have damaged, distorted or simply changed
global trading patterns and the duration and extent of the effects on the
system are still difficult to forecast. All in all, it seems likely that
countries will become more dependent on local or regional production or
production by friendly states. However, since globalization is driven by
technological progress, which is unlikely to halt, countries, their partners
and allies and the international community as a whole will need to learn to
manage more effectively this largely irreversible process.
http://en.wikipedia.org/wiki/Globalization
http://en.wikipedia.org/wiki/World_Bank
http://wiki.answers.com/Q/What_are_the_objectives_of_the_International_Monetary_Fund
https://www.forbes.com/sites/mikecollins/2015/05/06/the-pros-and-cons-of-globalization/#2025f589ccce
old but good
http://en.wikipedia.org/wiki/Globalization_and_Its_Discontents
http://en.wikipedia.org/wiki/Anti-globalization_movement
http://en.wikipedia.org/wiki/Trade_justice
Some historical and more recent background to globalization
Prior to World War II – The Wall Street
Crash, the Great Depression
https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929
http://fortune.com/2018/03/04/did-tariffs-cause-the-great-depression/
https://en.wikipedia.org/wiki/Great_Depression
https://en.wikipedia.org/wiki/1933_Banking_Act
After World War II
https://en.wikipedia.org/wiki/Bretton_Woods_system
https://www.brettonwoodsproject.org/2005/08/art-320747/
https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act#Criticisms
https://en.wikipedia.org/wiki/Subprime_mortgage_crisis
https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008
https://en.wikipedia.org/wiki/European_debt_crisis
https://www.thebalance.com/financial-regulations-3306234
http://europa.eu/rapid/press-release_MEMO-14-57_en.htm
https://www.ecb.europa.eu/press/key/date/2017/html/sp170313.en.html
https://news.stanford.edu/news/2014/november/banking-regulation-admati-110314.html
Clinton and deregulation
https://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html
Trump, banking deregulation
and tariffs
https://www.cnbc.com/2018/05/24/trump-signs-bank-bill-rolling-back-some-dodd-frank-regulations.html
https://en.wikipedia.org/wiki/Trump_tariffs
https://www.bbc.com/news/world-43512098
Under Biden
https://www.bbc.com/news/business-67758395
https://www.npr.org/2023/06/27/1184027892/china-tariffs-biden-trump
and the future?
