Geostrategic tensions are impacting the global economy, calling into question three decades of commercial and financial integration. Faced with a possible regionalisation of trade and a reorientation of flows, experts in finance, industry and logistics shared their analyses of this major economic transformation during our Country Risk Conference on 4 February.
Amid a global environment made particularly unstable over the last two years by the Russian invasion of Ukraine, the Hamas attack on Israel and escalating tensions between China and Taiwan, Donald Trump's return to the White House on 20 January 2025 has not taken long to fracture the current geopolitical framework a little more. The Coface Risk Conference brought together key players in the economic world to assess the impact of these developments on trade, finance and global logistics. Their contributions show that while globalisation has in fact been weakened, a generalised contraction is not under way and complex recomposition dynamics are at work.
A new era of globalisation
Amplified by the initial decisions of the Trump administration, the current geopolitical fracturing movement is undeniably weighing on activity and the configuration of world trade. "However, in the light of the trade data available to us, we cannot talk of deglobalisation", insisted Agatha Kratz, Partner at Rhodium Group, and a view shared by Ramon Fernandez, CFO of CMA CGM, the world's third-largest shipping group. Despite the vast geopolitical and electoral uncertainty that dominated 2024 and the disruptions experienced in certain strategic transit zones, trade flows have done better than resist, contrary to forecasts. "While 85% of world trade passes through oceans, we at CMA CGM have never transported so much cargo since Trump's first term in office, and volumes are continuing to grow," pointed out Ramon Fernandez. In 2024, international trade in goods will have grown (by around 6%) twice as fast as world growth (by around 3%), after stagnating in 2023, mainly on back of destocking practices implemented by companies.
Over the last five years, the Europe has become more dependent on the Chinese economy.
Agatha Kratz, Partner, Rhodium Group
In this respect, Agatha Kratz pointed out that "China's weight in international trade continues to grow", which is reflected in "Europe's greater dependence on Chinese imports than five years ago". Second, the expert has observed a double fracturing on the economic front. The most visible is the "disintegration" that is gradually taking place between the US and China in terms of investment and trade, which is illustrated, for example, by the significant drop in the share of US imports from China. The figures presented in the graph below confirm that the decline in Chinese exports to the US contrasts with the stability in China's share of world production.
China's share of world manufacturing output and US imports (%, 2004-2014)
Note: production measured as a share of gross value added
Source: US Census Bureau, World Bank, Macrobond, Coface
Data for the graph in .xls file
In addition to Sino-American tensions, China is withdrawing from the rest of the world. As Agatha Kratz pointed out, the world's second-largest economy is prepared to "shed its dependence on the outside world» and is therefore "importing much less". In the financial sector, however, the current geopolitical fracturing is not causing any fragmentation, at least not yet. "Major companies and financial institutions are continuing to invest and finance themselves all over the world", confirmed Anne-Christine Champion, Co-Head of Global Banking and Investor Solutions at Société Générale.
Trade war: what are the consequences?
Even though the Trump administration took a (temporary?) step backwards with regard to Mexico and Canada a few hours before the Coface Country Risk Conference, the US' decision to impose new customs duties on its main trading partners – starting with China – marked the start of a new trade war, seven years after the one launched by... Donald Trump. Agatha Kratz warned that "overall, the global economy will lose out. However, a few countries could also benefit, as they did a few years ago." Hitherto perceived as "assembly countries", a number of so-called "connector" countries such as Mexico and Vietnam have seen their value chains move upmarket and complexify. "The rest of the ASEAN group (Association of Southeast Asian Nations) has also been favourably impacted", added Agatha Kratz. Ramon Fernandez agreed with this observation, noting that "Asia remains a phenomenal trading area" and pointing to a massive acceleration in Chinese exports to the economies of South-East Asia and Mexico. "These countries, in turn, are also exporting more to the US." Among the advanced economies, the US has bucked the trend, "having done very well in the field of green products, such as electric batteries and solar panels, in keeping with the Biden administration’s priorities", added Agatha Kratz.
The dollar remains an unrivalled currency.
Anne-Christine Champion, Co-Head of Global Banking and Investor Solutions, Société Générale
In addition to the consequences for inflation, world trade growth and the reorganisation of certain supply chains, the US offensive against China in particular could also have knock-on effects. Faced with sluggish domestic consumption, China will have no choice but to find new outlets for its exports, which will not be channelled to the US owing to higher tariffs. Against this backdrop, experts expect some of these goods to be redirected to ASEAN countries, countries of the Global South and the European Union. The prospect is likely to sour relations between the Old Continent and China. Agatha Kratz warned that "in order to prevent this surge in exports from destroying European industry even further, the Commission will probably be forced to introduce trade protection measures". But some manufacturers are not shying away from this threat. "In our kitchen equipment sector, Chinese products already have a strong presence in Europe, so the risk of an influx of imports from China should be put into perspective", said Thierry de La Tour d'Artaise, Chairman of Groupe SEB, who believes that innovation is the best salvation measure for companies in advanced economies.
We've never transported so much freight.
Ramon Fernandez, Group Chief Financial Officer, CMA CGM
Contrasting trends on the regulatory front
The European Union already confronted the phenomenon of regulatory decoupling with the UK following Brexit. It is now running a similar threat vis-à-vis the US. The risk applies first and foremost to the financial sector, where Donald Trump has vowed large-scale deregulation. "This poses a problem for European banks and, more broadly, for the European economy insofar as European companies obtain 70% of their financing from the banking market, while their US counterparts obtain 80% from the bond markets," pointed out Anne-Christine Champion. This looming competitive disadvantage appears all the more problematic given that European economic players are already subject to restrictions that are not imposed on their competitors, for example in environmental matters. "In Europe, we have the ‘ETS’ and multiple regulations that take various forms. Even though these are part of a virtuous approach, we are competing with a world where these rules do not exist", pointed out Ramon Fernandez. Thierry de La Tour d'Artaise calls on the European and French authorities to reason. "I'm less afraid of AI (artificial intelligence) than of a CI (Chinese invasion) or of NI (normative inflation). And we in Europe are going to die of normative inflation."
To find out more about world trade, download our full study
Also watch the replay of the round table of the 29th Country Risk 2025 Symposium -> https://youtu.be/eJkZ5f-VhYw?si=L7X2YkAZv2f-53jj
