Despite tariffs, geopolitical frictions, and talk of de-globalization, global supply chains are holding steady, according to DHL and the New York University Stern School of Business’ latest Global Connectedness Tracker.
“Despite policy headwinds, globalization — when it comes to actual international flows — has not gone into reverse. What we’re seeing is a pattern of companies and countries managing the risks of a more turbulent world rather than retreating from international engagement,” Prof. Steven Altman of NYU Stern’s School of Business, said during the DHL Global Connectedness Tracker webinar on Tuesday.
Altman said data from more than 20 million data points across 25 sources show “no broad shift from international to domestic business” despite policy shocks and rising protectionism.
The 2025 tracker, jointly developed by DHL and NYU Stern, offers what Altman called “the most comprehensive, timely assessment of the state of globalization” since President Donald Trump’s second-term trade measures took effect.
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The initial expectation of a sharp slowdown in global trade due to Trump’s tariff policy during 2025 has not materialized yet, largely due to a wave of front-loaded imports and continued strength in China’s export activity, Altman said.
“That reflects essentially the way the tariff announcements come in very fast and there are high numbers, but the actual implementation of the tariffs has been much slower,” Altman said. “Front-loading helped counter some of the early effects, but the slower ramp-up of tariffs means some of the harm to trade growth shifts from 2025 to 2026.”
He added that global trade growth is likely to normalize by 2027–2029 as the market adjusts to the new baseline.
At the same time, Altman highlighted that China’s trade diversification — marked by steep declines in exports to the U.S. offset by rising shipments to Asian nations, Africa, and Europe — has helped sustain its overall export momentum despite escalating trade barriers.
Forecasts show slower but steady growth
DHL’s composite forecast now projects slower trade expansion through 2029 due to tariff uncertainty, but no reversal. The compound annual growth rate remains 2.5%, matching the past decade’s trend.
North America saw the largest downgrade in its five-year trade outlook, while South and Central Asia, sub-Saharan Africa, and the Middle East are expected to post the strongest gains.
“North America was the region that had the biggest downgrade to its trade growth forecast, and that reflects the fact that this is the region where we’re actually having the tariff increases originating in the U.S.,” Altman said.
Regionalization trends mixed, U.S.-Mexico trade expands
Contrary to predictions of “nearshoring,” DHL’s data found that international trade distances reached a record 3,045 miles in early 2025, suggesting global supply chains remain geographically wide.
Mexico, however, stands out as a mixed case — its exports are becoming more regional, increasingly directed to partners in the U.S. and Canada, while its imports are diversifying, coming from a wider range of global sources.
“Mexico has a pattern of increasing regionalization in its exports, increasingly exporting to partners in North America, especially the United States. While Mexico’s imports are becoming less regional. Mexico is bringing in more goods from other parts of the world,” Altman said.
The same lack of regionalization is reflected in cross-border investment, Altman added, with greenfield and merger activity showing no consistent move toward more localized production or capital flows.
“There are many reasons why business might become more regionalized in the future, but that has not really happened so far,” Altman said.
