Weekly Market Update

Trade Repositions While Globalization Wanes

Since 2008, globalization's growth has slowed, with trade shifting toward geopolitically aligned nations. This trend may impact economic growth, inflation, and lead to increased market volatility and lower cross-country correlations.

March 17, 2025 5 min read

Chris Carpentier, CFA, FRM

Senior Investment Strategist

Christine Norton

Investment Strategy & Research Specialist

Zanub Raza

Fixed Income Portfolio Specialist

Prior to President Trump’s inauguration, it was known that his administration viewed tariffs as a viable tool to accomplish desired outcomes, so in some regards, we ca not be too surprised by all the news of late. However, the unknown was, and still is, the degree to which they will be enforced, along with their impacts on growth and inflation across the world.

The chart above shows a 50-year history of global trade (exports plus imports) as a percentage of GDP. The increasing amount of trade over prior decades was a clear trend, leading to more dependence on economies other than one's own. Free trade agreements facilitated the easy movement of goods from lowest-cost producers to other countries.

However, something seems to have changed since the financial crisis of 2008, where the upward slope of globalism has halted and has now gone sideways. It is not quite de-globalization, but the globalization momentum has clearly stopped. Besides a stop of the trend, what we have also seen over the last 10–15 years has been a shift in trade to more geopolitically aligned countries. Overall, the current political mood certainly points to further decoupling, which can have implications for economic growth, inflation, and other investment implications such as higher volatility and lower correlations between countries.

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