Recent analysis suggests that deglobalization is not a sudden rupture but a gradual structural change unfolding before our eyes.
This shift is driven by several interconnected factors, with inflation being a primary signal. Firstly, persistent geopolitical tensions, such as the recent military clashes in the Strait of Hormuz, are creating supply shocks. These events increase shipping and insurance costs, directly feeding into higher prices for goods. Secondly, the impact of tariffs imposed in 2025 is now fully materializing. A U.S. Federal Reserve study estimates that these tariffs have added approximately 0.8 percentage points to the core PCE inflation rate. This means that even without new shocks, the baseline for inflation is structurally higher than it was in the past decade. It's a shift from a disinflationary world to one where price pressures are more persistent.
Furthermore, while headline global trade figures appear robust, they mask a significant underlying transformation. The World Trade Organization (WTO) notes that nearly half of the trade growth in 2025 was driven by AI-related goods like semiconductors and servers. This concentration creates an illusion of healthy, broad-based globalization. In reality, supply chains are becoming longer, more complex, and rerouted to avoid geopolitical hotspots and tariffs. This is the essence of 'friend-shoring' and reshoring—trade is not disappearing, but it is being rewired along geopolitical lines, favoring allied nations and domestic production.
This structural change also extends to the financial system. For decades, the U.S. dollar and U.S. Treasury bonds were unquestioned safe havens during times of crisis. However, there are signs this is slowly changing. Central banks are gradually diversifying their foreign reserves, increasing their holdings of gold, and reports from institutions like the Bank for International Settlements (BIS) show that the traditional negative correlation between stocks and bonds is weakening. While this doesn't signal an imminent collapse of the dollar's dominance, it points to a multipolar financial world where investors can no longer rely on old assumptions.
In conclusion, the world isn't deglobalizing in the sense of trade volumes collapsing. Instead, we are witnessing a profound rewiring of the global economy. This 'slow deglobalization' is characterized by higher structural inflation, fragmented and politically-driven supply chains, and a shifting financial landscape. It's a less efficient but potentially more resilient system, and understanding this gradual trend is key to navigating the new economic environment.
- Glossary -
- Core PCE: An inflation measure tracked by the U.S. Federal Reserve that excludes volatile food and energy prices to gauge the underlying inflation trend.
- Friend-shoring: The practice of rerouting supply chains to countries perceived as politically and economically safe or allied, rather than prioritizing the lowest cost.
- Term Premium: The extra compensation investors demand for holding a long-term bond instead of a series of short-term bonds. It reflects risks like future inflation and policy uncertainty.