How Deglobalization Could Slash Global Trade by 18%

Deglobalization Threatens to Cut Global Trade by 18%

The OECD’s latest report warns that the current wave of deglobalization—marked by U.S.-led tariff wars and production reshoring—could reduce global trade volume by 18%, with some nations losing up to 12% of GDP. Countries like Canada, France, Germany, and the UK are especially vulnerable to supply chain disruptions.

Marion Jansen, OECD’s Head of Trade and Agriculture, cautioned that while over-reliance on single trade partners is risky, excessive reshoring would backfire: "Avoiding international trade leaves economies exposed to domestic shocks and chronic inefficiencies."

Since early 2025, container shipping clients have accelerated reshoring or shifted production to alternative countries (e.g., Vietnam) to bypass tariffs. Maersk CEO Vincent Clerc noted: "The paralysis from trade policy uncertainty is unprecedented."

Volatile Freight Rates: A Short-Lived Boom

Despite a 146% surge in China-U.S. freight rates (May–June 2025), prices peaked abruptly in early June as capacity rebounded and demand fell short. Key data:

• West Coast rates: Peaked at $6,100/FEU (June 1), then dropped $500 within days.

• East Coast rates: Hit $7,164/FEU before retreating.

• Breakeven level: $1,700–$2,000/FEU for carriers.

Xeneta analyst Peter Sand attributed the spike to temporary capacity cuts and tariff panic: "The trans-Pacific frenzy will cool as supply chains rebalance."