Is Globalization Changing or Simply Taking a New Form?

From past to present, the same answer. Ask anyone who ships containers for a living, and they'll tell you the same thing analysts have argued over for the past few years. Globalization isn't dying, it's molting. The old structure, built on cheap freight, frictionless tariffs, and the assumption that supply chains could stretch across oceans without political consequence, is cracking off. What's underneath looks different, but it's very much alive.

Nevertheless, that distinction matters because the popular narrative swings between two extremes. One camp insists we're living through "deglobalization," pointing to tariff wars, chip export controls, and companies pulling factories out of China. The other says nothing has really changed, since trade is still growing. Neither story holds up cleanly against the data. The real picture is messier, and more interesting.

The Numbers Say Globalization Is Still Breaking Records

To begin with the headline figure. Global trade grew by $2.5 trillion in 2025 which was increasing by about 7.5% to a record of $35 trillion. That's not a rebound from a slump. It's an all-time high. Trade in goods drove most of the expansion, growing by about 7% and adding roughly $1.8 trillion to global growth, whereas trade in services grew by around 8% while contributing about $700 billion to the total increase.

Even more telling is who's driving the growth. It isn't only the traditional US, Europe, and China triangle. Trade growth was widespread but stronger for developing economies in East Asia and Africa, with South-South trade outpacing the global average, expanding by about 9%. A German auto part or an American software license is no longer the default unit of "global trade." Increasingly, it's a Vietnamese electronics component headed to Nigeria, or a Brazilian soybean shipment bound for Indonesia.

So no, globalization hasn't collapsed. By raw volume, 2025 was its biggest year on record.

The Foundations Are Shifting Under That Growth

The whole activity and story is very complex. Multiple trade bodies now agree that the record growth of 2025 was partly inflated by panic buying. When the US announced sweeping tariffs in April 2025 under the International Emergency Economic Powers Act, global trade was jolted into sudden adjustment, sparking a widespread wave of frontloading, especially in the US, that even brought forward the container shipping peak season as importers rushed to secure goods. Strip that artificial bump out and the underlying trend looks softer.

Moreover, the forecasts for 2026 reflect that correction. In the baseline scenario, growth in the volume of goods trade would decline from 4.6% in 2025 to 1.9% in 2026, before recovering to 2.6% in 2027, while growth in services trade would slow from 5.3% in 2025 to 4.8% in 2026, before increasing to 5.1% in 2027. UNCTAD strikes a similar cautious note while warning that rising geopolitical tensions and disruptions to key shipping routes which include the ongoing conflict in the Middle East and disruptions in the Strait of Hormuz, are raising trade costs and adding pressure on countries with limited fiscal space.

Perhaps the single most revealing statistic in this whole debate is a quiet one from the WTO. The share of world trade conducted on a most favoured nation basis has fallen to 72%, after fluctuating throughout 2025 in the wake of unprecedented policy shifts. Nearly three in ten dollars of global trade now moves under some kind of special arrangement or exemption rather than the standard rules that defined the free trade era. That's a structural change in how the world does business.

Then there's the US and China, 'The Economic Giants'. The two economies are continuing to decouple even as global volumes stay resilient. US imports later dropped below prior year levels, but rising Chinese exports to non-US markets helped sustain global trade volumes. What's striking is how small a dent this makes on a global scale. In 2025, 13% of imports went to the US, and 9% of exports came from the US. The overwhelming majority of global trade never touches American ports at all.

Globalization Isn't Retreating, It's Rerouting

Companies aren't abandoning global supply chains, they're redrawing the map which is very essential these days. The shorthand for this shift is friendshoring or nearshoring: moving production to politically aligned or geographically closer partners instead of the cheapest available location.

Furthermore, the scale of this shift shows up in hard survey data in a recent time. According to the EIB Investment Survey 2025, 19% of EU importing firms are actively diversifying or increasing the number of countries they source from, and a Capgemini Reindustrialization Report 2025 found that 73% of executives expect friendshoring, or sourcing from politically stable, trade-aligned partners, to account for a significant share of their operations going forward. Likewise, Bain & Company's research tells an even sharper version of that story. 81% of respondents cited plans to move supply chain operations closer to market, an 18% increase from the previous survey, with 18% citing investment in onshoring or nearshoring and 46% in split-shoring, a mix of offshore and onshore or nearshore manufacturing, although only 2% of respondents had fully completed such a shift.

The clearest real world evidence of this pivot is Mexico. According to Kearney's 2026 Reshoring Index, which looks at imports of goods from 14 Asian countries and regions, the overall manufacturing import ratio has increased for a second year in a row to 14.15%, with nearshoring following the same upward trend as Mexico surpassed mainland China as the largest exporter to the US. That would have seemed unthinkable a decade ago, when "Made in China" was practically shorthand for global manufacturing.

Full reshoring back to home soil remains the exception rather than the rule. A BofA Global Research proprietary survey found only 20% of respondents expect significant reshoring, while 40% call for mild relocation to the US within select sectors including electronics, biotechnology, and metals and mining, sectors that are more capital than labor intensive and expected to take one to three years to complete. Bringing a factory home is slow and expensive. Moving it next door, or to a friendly country, is far more realistic, and that's exactly what the data shows companies doing.

The New Engine: Data, AI, and People, Not Just Containers

If one sector defies the slowdown narrative entirely, it's technology. The surge in AI and ICT related trade drove much of the manufacturing sector's expansion in 2025 and is expected to remain an engine of growth in the coming quarters, while energy trade remained volatile and the automotive sector stayed subdued amid rising protectionism. Every data center built and every cloud contract signed across borders is a form of globalization that barely existed in the old container ship model of world trade.

Therefore, globalization is increasingly about people, not just products. DHL's Global Connectedness Report notes that even as information flows face barriers, people flows are reaching new highs. The world isn't retreating into isolated national bubbles. It's connecting through different channels than it used to.

So, Changing or Simply New?

Layer all of this together and a coherent pattern emerges. Volume is up, not down, with 2025 a record year for global trade. Rules are fragmenting, with nearly 30% of trade now moving outside standard tariff terms. Geography is being redrawn, with Mexico overtaking China and friendly partners increasingly preferred over the cheapest bidder. New categories are dominant, with AI, data, and digital services doing the heavy lifting that manufacturing once did. And people and information are moving in different directions, with humans flowing more freely even as data flows less freely.

That's not the death of globalization. It's globalization being renovated in real time, replacing an open floor plan built for efficiency with something closer to a house full of load bearing walls, built for resilience. The label survives. The blueprint doesn't.

The Author's Perspective

Having gone through the data, I don't think this is a coin flip question, it's a false choice to begin with. Globalization was never a single, fixed thing. Because it was always a description of how tightly the world's economies happen to be wired together at a given moment, and that wiring has rerouted itself before, after the world wars, after Bretton Woods, after China joined the WTO in 2001. What we're watching now is simply the next rewiring, and arguably a healthier one than the version it's replacing. If we look at the pre-2018 model, it concentrated an enormous amount of risk in a handful of chokepoints, one factory region, one shipping lane, one dominant supplier, and called that efficiency. What's emerging instead is more distributed and more resilient to shocks, even if it's also more expensive and more politically charged. My honest view is that globalization isn't retreating, it's diversifying, the way an investor diversifies a portfolio after getting burned by putting everything in one stock. Hence, the world isn't unplugging from itself. It's simply refusing to keep all its plugs in the same socket.