Deglobalization: Myth or Megatrend?
Since 2018, every major geopolitical event has been accompanied by declarations that globalization is over. COVID broke supply chains. The US-China trade war rewired manufacturing. Russia's invasion of Ukraine proved that economic interdependence doesn't prevent conflict. But the data tells a more complicated story.
The case for deglobalization
The evidence isn't nothing. Global trade as a percentage of GDP peaked around 2008 and has been flat to slightly declining since. Foreign direct investment flows dropped significantly after COVID and haven't fully recovered. The US has passed three major pieces of industrial policy legislation in four years specifically designed to bring manufacturing home or redirect it to allies.
China's share of US imports has fallen from 21% in 2017 to around 13% today. That's a significant reshuffling of trade flows, not a rounding error. Companies from Apple to Nike have visibly diversified their supply chains into Vietnam, India, and Mexico. 'China plus one' went from a consulting buzzword to standard corporate strategy.
The case against
Here's what the deglobalization narrative misses: trade didn't decline, it redirected. US imports from Vietnam, India, and Mexico have all surged. Global shipping volumes are at near-record highs. The total volume of goods crossing borders is larger than it was in 2018, it just crosses different borders.
Financial globalization is also deeper than ever. Capital moves across borders almost instantly. A rate decision in the US reverberates through emerging market currencies within hours. The largest companies in the world are still global enterprises, they just have more complex supply chains than they used to.
What's happened isn't deglobalization. It's a reorganization of global trade around geopolitical blocs. That's genuinely different from what came before, but it's not the same as the world fragmenting into self-contained economic islands.
The friend-shoring reality
The emerging framework is what economists call 'friend-shoring': moving supply chains not back home, but to geopolitically aligned countries. The US-Mexico-Canada Agreement is facilitating an enormous amount of manufacturing that used to happen in China. India is positioning itself aggressively for both manufacturing and services. The Gulf states are building industrial bases to capture flows that used to go elsewhere.
This creates real winners and losers. Mexico's manufacturing sector is in the middle of a historic boom. Parts of Southeast Asia are thriving. But countries that were tightly integrated with China and don't have natural alignments with the US-led bloc are caught in an awkward middle.
What this means for investors and businesses
Stop thinking about globalization as a binary. The question isn't whether the world is deglobalizing. It's which flows are shifting and toward where. Supply chain decisions that made sense in 2015 don't make sense in 2026. Regulatory risk in certain markets has become structural, not cyclical.
The megatrend is real, but it's more nuanced than the headlines suggest. The world isn't closing. It's reorganizing. And the companies and countries that understand the new map early will be the ones that look smart five years from now.