Picture credit: DHL Group
Forecasts predict that the goods trade will grow at a compound annual rate of 3.1% between 2024 and 2029, which roughly aligns with GDP growth is slightly faster than the previous decade’s growth.
The DHL Trade Atlas says that even if the USA implements all of its proposed tariffs and other countries retaliate, global trade will grow over the next five years, but at a slower pace.
John Pearson, CEO of DHL Express, says, “There is still significant potential for trade growth in advanced and emerging economies worldwide. It's impressive to see how international trade continues to withstand every conceivable challenge, from the 2008 financial crisis and the COVID-19 pandemic to tariffs and geopolitical conflicts.”
India, Vietnam, Indonesia and the Philippines are forecast to rank among the top 30 for speed (growth rate) and scale (absolute growth) with India standing out for having the third largest absolute growth at 6%, beaten only by China at 12% and the USA at 10%.
The research also found that trade is not becoming more regionalised, despite the interest in nearshoring and producing goods nearer to customers.
Actual trade flows indicate the opposite with the average distance covered by traded goods reaching a record 5,000 kilometres in the first nine months of 2024 while the share of trade within major regions fell to a new low of 51%.
Trade policies of the USA are being treated as an opportunity and its trade barriers could strengthen ties among other countries.
DHL adds that many of President Trump’s tariffs may be changed or delayed to prevent a spike in domestic inflation.
The USA’s share of world imports is 13% and exports are 9%, which is enough for policies to have substantial effects on other countries but not enough to unilaterally determine the future of global trade.
Steven Altman, Senior Research Scholar and Director of the DHL Initiative on Globalization at NYU Stern's Center for the Future of Management says threats to the global trading system need to be taken seriously but global trade has always proved to be resilient because it delivers great benefits to economies and societies.
He says, “While the USA could pull back from trade - at a significant cost - other countries are not likely to follow the USA down that path because smaller countries would suffer even more in a global retreat from trade.”
The research provides an update on geopolitically driven trade pattern shifts, finding that trade between blocs of close allies of the USA and China declined in 2022 and 2023 relative to trade within the blocs, the declines were minor and did not continue in 2024.
The USA and China have reduced their shares of trade with each other but this did not create a meaningful decoupling.
Direct USA-China trade fell from 3.5% of world trade in 2016 to 2.6% in the first nine months of 2024 but the research says that the USA still brings in as high a share of its imports from China as the rest of the world does.
There is evidence that US imports from China are underreported and the data considers Chinese inputs in goods the USA imports from other countries, suggesting no meaningful drop in US reliance on goods made in China.