BCG Report Highlights Geopolitical Shifts Reshaping Global Trade

January 13, 2025

A new report from Boston Consulting Group (BCG), titled Great Powers, Geopolitics and the Future of Trade, reveals significant transformations in global trade dynamics as major regions adapt to geopolitical tensions, shifting supply chains, and emerging economic powerhouses. The report, which spans projections from 2023 to 2033, underscores the growing influence of the Global South, the rise of India as an economic giant, and the recalibration of trade relationships among North America, Europe, and Asia.

BCG’s analysis highlights the strengthening of North America as a resilient trade bloc. The US, Mexico, and Canada are deepening economic ties through reshoring, nearshoring, and “friendshoring,” reducing dependence on China. Trade between the US and Mexico is projected to surge by $315 billion, with US-Canada trade increasing by $147 billion within the next decade. In contrast, China is pivoting towards the Global South as trade with the US and EU slows. China’s trade with developing nations is expected to grow by $1.25 trillion, though its overall trade growth will slow to 2.7% annually, down from the 4% recorded between 2017 and 2022.

The Global South itself is poised to expand its influence. With 62% of the world’s population, these 133 nations are expected to see trade growth of $673 billion within the bloc. Meanwhile, trade between the Global South and North will grow at 3.7% annually, reaching $1.67 trillion by 2033. The report also highlights India’s burgeoning role as a production base, projecting its trade to grow by 6.4% annually, reaching $1.8 trillion by 2033.

Europe faces its own challenges as it seeks to maintain competitiveness amid geopolitical tensions and energy uncertainties. EU trade with China is set to stagnate, while trade with the US is expected to grow by $303 billion, bolstered by American LNG exports. The EU is also shifting supply chains closer to home, benefiting regions like North Africa and Turkey. However, post-Brexit frictions mean the UK lags behind, with projected trade growth of just 0.7%, far below GDP growth.

Southeast Asia is emerging as a winner from the reorganisation of global trade routes, with ASEAN trade forecasted to grow at 3.7% annually. While the region strengthens ties with China, trade with the US and EU is expected to moderate. Meanwhile, US tariffs on imports could add $640 billion in costs for its top trading partners, impacting sectors such as automotive and electronics.

BCG’s report draws on its advanced Global Trade Model, leveraging over 500 million data points to forecast trade trends. Enhanced AI capabilities and adjustments for current geopolitical realities provide a detailed and nuanced outlook. The findings underscore the profound ways in which trade policy, global alliances, and economic strategies are reshaping the world’s trade landscape.

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