Why US tariffs failed to dent global trade

By Mihir Sharma

Last year was supposed to mark the moment international trade was dismantled. President Donald Trump’s tariffs, we were told, were so unprecedented in scale and ambition that they might stop globalization in its tracks.

Yet here we are in 2026, and the spreadsheets stubbornly refuse to tell the same story. According to the latest data from the UN’s trade and development body, UNCTAD, in 2025 the value of global trade likely crossed $35 trillion for the first time in history. That’s 7 per cent more than the previous year.

The White House can tax trade, but it can’t shut it down. Technology, markets, and human ingenuity will stop that from happening.

Tariffs did have an impact, of course. The first half of 2025 saw panic-buying of various kinds, as importers front-loaded orders to get ahead of any tax shocks. It looked like companies were desperately trying to get their products across borders before politicians slammed the gates shut.

But that’s not all that’s going on. This isn’t the 1930s, and goods aren’t the only way that value crosses borders. Trade in services grew at 9 per cent.

The global economy is dematerializing much faster than economic nationalists can legislate. You can stop washing machines or steel ingots at your ports, but it’s much harder to stop your companies from buying cloud computing contracts or chip designs from abroad.

Even trade in goods can behave intuitive ways when tariffs increase. When you make it harder to buy and sell something, you can also increase how much that commodity costs. In the first six months last year, as an example, prices of tradeable goods increased sharply; this was probably a response to Trump-driven uncertainty.

In general, even if the actual physical volume of merchandise crossing borders goes down, the total value embedded in that exchange might increase. And that is what will happen if Trump succeeds in turning the clock back, and the US starts making T-shirts at home but continues to import ever more expensive intermediate goods and machinery.

Trade policy can be reversed, but technology only advances. Faced with the enormous leap in potential and capability that AI (perhaps) represents, no country can wall itself off completely. The global demand for metals from Africa, semiconductors from Taiwan, and data-center gas turbines from Japan will continue to increase.

When production is so dispersed and demand is this determined, governments can’t shut down imports. They can at best shift bottlenecks and high prices from one section of the supply chain to another. Most often, they will raise costs at home while some trusted partners continue to profit.

That’s why, even though South Korea struggled to deal with Trump’s tariff and investment demands, its exports may have simultaneously crossed $700 billion for the first time. Taiwan estimates its trade grew at 7.37 per cent in 2025, faster than for 15 years.

Those predicting the imminent death of trade clearly forgot about services, technology, and the strange, chaotic mathematics of value addition. But the biggest thing they failed to account for is people.

Entrepreneurs find a way to make money, and producers find a way to sell their goods. Much of the energy that, for the past few years, had been spent on trying to shift away from Chinese suppliers has now been diverted to de-risking away from US buyers.

The search for resilient supply chains is giving way to the hunt for reliable markets. As UNCTAD pointed out, South-South trade grew quicker than the global average, while intra-regional trade in East Asia rose 10% on last year’s figures.

The US is certainly a huge and irreplaceable consumer market. But the impact of its trade barriers will not be uniform across countries and sectors. For some, the loss of jobs and contracts will be devastating. But most will diversify, seeking other export destinations — or indirect routes into the US market.

UNCTAD thinks that the full impact of the grit in globalisation’s gears may only be felt this year, and warns that a slowdown is possible. There will be difficult moments in 2026, but the lessons of 2025 will be hard to forget.

The world economy is more resilient than we gave it credit for; the forces pushing our economies together are more powerful than any strongman. New models of trade will inevitably emerge, built on regional integration, cross-border services and technological transformation. Even if America shuts its doors, the marketplace outside its walls will grow ever busier.