Record tariffs, but trade is growing. Globalisation is holding its ground against Trump

In the year that was supposed to mark the end of globalisation, international trade continues to expand. The World Trade Organisation’s barometer for July 2026 stands at 102, indicating growth above the trend (corresponding to the conventional value of 100) and compared with June.

The main drivers are electronic components (linked to the AI boom) and orders from businesses. However, the figures for air transport, raw materials and motor vehicles are also positive; only maritime freight traffic is below trend (99.6). The barometer anticipates future trends and is consistent with recent developments. In particular, trade in goods is forecast to grow by 1.4–1.9 per cent during 2026, depending on energy prices. In the first quarter of this year, year-on-year growth stood at 3.2 per cent (though this does not yet reflect the impact of the Strait of Hormuz).

These findings are not isolated. According to DHL’s connectivity report, 2025 saw the greatest expansion in international trade since 2017. Only 4–6 per cent of trade flows have been affected by geopolitical rivalry over the past decade. There is one major exception: the movement of goods, capital and people from China to the US has fallen by 42 per cent since 2016, whilst the opposite flow has fallen by 37 per cent. However, this disruption is largely offset, at least in part, when one takes into account the triangulation routes via third countries that businesses use to re-establish supply chains, in defiance of the restrictions.

Since Donald Trump took office, trade tensions have reached unprecedented levels. Although many of the initial tariffs were struck down by the Supreme Court, new ones have been introduced and the average tariff rate is at an all-time high. Most of the affected countries have avoided retaliatory measures, but some – China and Canada in particular – have reacted, leading to a further deterioration in relations. Yet globalisation continues: as with Mark Twain, reports of its death are greatly exaggerated. How should we interpret this phenomenon? Quite simply, abandoning international trade in favour of ‘local’ suppliers is costly and complex. When we write that ‘Italy and Germany are trading partners’, we mean that thousands of Italian and German businesses and citizens buy the products they need from one another. They do so because the alternatives are of poorer quality or more expensive. Altering trade flows, through tariffs or other means, amounts to imposing sub-optimal choices. Consequently, the effect of restrictions ultimately feeds into inflation (or a reduction in importers’ margins) rather than leading to a genuine reorganisation of trade. This also stems from the complexity of the modern economy: very few products originate entirely from a single country. Most are made from components manufactured and assembled in other nations.

Even if it were desirable, the promise made by the US Secretary of Commerce, Howard Lutnick (to bring back to the US ‘the army of millions of people who tighten tiny screws to make iPhones’) is unachievable. Modern society is so prosperous precisely because it has taken the specialisation of labour to a level that makes it virtually impossible to renationalise production. Moreover, the attempt to persuade companies to relocate overseas is faltering due to long lead times, high costs and the difficulty of finding skilled staff. Globalisation does not stem from a political choice: it is the result of billions of individual decisions which, fortunately for us, are practically impossible to control.