Allianz Trade Global Trade Outlook

Following the results of the US elections, US-China relations will remain tense and continue to fragment global trade.

• A renewed but contained trade war could bring nominal global trade growth below 5% in 2026 (-0.6pp), with USD67bn of exports at risk in Europe and China in 2025-26 (half of the global total).
• Over the past two years, bilateral trade flows between geopolitically close countries have jumped by USD620bn and now account for 60% of global trade.
• The next generation of trade hubs is expected to grow its share of global exports by +1.6pp over the next five years (reaching USD1274bn).

Although global trade remains strongly intertwined with the US economy , China has emerged as a new superpower, banking on its critical role in global manufacturing and its large and rising domestic market. Against this backdrop, rising US-China tensions are reshaping global supply chains and paving the way for new trade powerhouses, according to new research from Allianz Trade, the world leader in trade credit insurance.

Trade war reloaded as Trump returns to office

In his second term as US President, Donald Trump is likely to increase tariffs on Chinese and other strategic imports (to 25% for the former and to 5% for the rest of the world, excluding Mexico and Canada), which would decrease nominal global trade growth by -0.6pp in 2026 as most measures would kick-in from the second half of 2025. China and the EU would bear most of the cost, with USD67bn of exports at risk in 2025-26, especially in automotive manufacturing, transport equipment and metals. Their retaliation measures are likely to hit US pharmaceuticals, automotive, metals, agrifood and machinery.

“In the event of a full-blown trade war (60% tariffs on China and 10% on the rest of the world, including Mexico and Canada), the toll would increase to 2.4pps of nominal global trade growth and China, Mexico and Canada would be hit the hardest, with cumulated export losses totaling to close to USD217bn over 2025-26. But this scenario looks unlikely as the US would also have to face a large cost,” says Ana Boata, Head of Economic Research at Allianz Trade .

Asia: changes in export gains before and after Trump victory

In our previous scenario, before the US elections, cumulative export gains for China in 2025-26 was expected to amount to USD372bn, followed by India (USD176bn), Taiwan (USD118bn), Singapore (USD90bn), Vietnam (USD48bn) and Hong Kong (USD39bn). However, with a contained trade war likely on the horizon, we now expect export gain for China will decrease by USD34.2bn to USD337.8bn. Similarly, impact for India is expected to be -USD4.1bn, Taiwan (-USD4.4bn), Singapore (-USD4.7bn), Vietnam (-USD1.0bn) and Hong Kong (+USD0.2bn). In an extreme scenario of a full-blown trade war, China’s export gain is expected to lower by USD125.3bn while the US will take a toll of USD133.2bn of its own.

American “godfathering” vs China’s “silk” doctrine

Global trade is increasingly being shaped by the competing geoeconomic agendas of the US and China. US imports have been breaking away from China, and China has been exporting more to its own geopolitically close partners (Russia, Singapore, Vietnam, the UAE, Saudi Arabia). In this context, bilateral trade between geopolitically aligned countries has risen by +2pps (USD620bn) to 60% of global trade in just two years.

“China’s trade-and industry-centric “silk” doctrine has mostly relied on soft power and connective influence, while American “godfathering” rests on four pillars: (i) an unwavering commitment to protect core national interests at all costs, (ii) securing loyalty within the network of historical allies, (iii) an active economic and military stance against rivals and (iv) expanding American influence and control across new domains such as space, tech, and AI. No matter who wins the US elections, this clash is here to stay,” explains Ano Kuhanathan, Head of Corporate Research at Allianz Trade.

New trade hubs are emerging as winners, but making global supply chains more complex

In the years to come, global trade is likely to grow below its long-term average (+3.0% in 2025 and +3.1% in 2026). At the same time, Allianz Trade’s supply-chain complexity index shows that global trade flows are becoming more intricate, with complexity levels doubling since 2017 and rising 6x compared to the pandemic years. In this context, Allianz Trade identifies 25 economies that could benefit from this new geoeconomic order, given their relatively higher competitiveness compared to China in the context of an intensified trade war from the US.

“Beyond fast-growing economies such as India, this shift has opened doors for nations like Vietnam, Malaysia, Indonesia, and the UAE to step up as next-generation trade hubs. We expect these economies to grow their share of global exports by +1.6pp over the next five years, reaching USD1274bn. As these hubs grow to account for up to 21.3% of all global exports by 2029, they will also need to invest USD120bn on port infrastructure alone to maintain their momentum,” adds Françoise Huang, Senior Economist for Asia Pacific and Trade at Allianz Trade.

Choosing sides in the new geoeconomic order

By looking at the next-generation trade hubs and other major economies’ geopolitical, trade and cross-border investment links with the US and China, respectively, Allianz Trade computes geoeconomic distance scores relative to both countries. These scores show that China’s sphere of influence includes more next-generation trade hubs from the emerging world, while most of the Western bloc remains closer to the US.

Unsurprisingly, the UK is the closest country to the US followed by Ireland and the Netherlands, with Canada in 4th place and Mexico only in 28th. Most African and Asian nations are closer to China: on average 0.5 for African nations vs 0.7 distance with the US and 0.4 for Asian nations vs 0.6 distance with the US. But after Hong Kong, Canada is the 2nd closet economy to China – managing to remain close to both superpowers.

“Australia, South Korea, and Greece are among the other nations that have managed to maintain the same distance with both the US and China. These countries are geopolitically closer to the US but retain very strong trade and investment relations with China. This position could potentially become increasingly uncomfortable and force them to pick a side, should the new geoeconomic order centered on the US-China confrontation deteriorate significantly,” concludes Ms Huang.

1. This index considers shifts in trade flows, geographic distance, geopolitical alignment, and our country risk ratings.
2. These scores range from 0 (very close) to 1 (very distant).