Global Trade Reshapes: Supply Chains Shorten as Geonomics Displaces Globalization

Global trade patterns are undergoing fundamental restructuring in 2026 as companies respond to tariffs, de-risking mandates, and geopolitical tensions by shortening supply chains and broadening supplier bases. Intra-regional trade now drives two-thirds of global trade growth, according to Visa's Global Economic Outlook.

Three Themes Shaping 2026

The World Economic Forum describes 2026 as a year shaped by three themes: growth through industrial competition, resilience against energy security risks, and intensifying global competition. Instead of classic energy policy, governments are focusing on industrial policy including local-content rules, tax credits, subsidies, and trade measures to achieve economic and strategic objectives.

Divergent Approaches Across Economies

Major economies are pursuing dramatically different approaches to trade and technology development. The United States raised significant barriers to trade in 2025, disrupting supply chains and creating financial market volatility before striking deals with numerous countries. These actions have pushed other countries closer together, with multiple trade agreements being signed among non-U.S. nations.

Regional Industrial Policies

China continues expanding the scope of its carbon market while planning to introduce absolute emissions caps. Japan's GX-ETS carbon market launches in 2026, potentially laying foundations for industrial sector decarbonization. Europe is rethinking its industrial model through the Net-Zero Industry Act, aiming for 40 percent domestic manufacturing of key net-zero technologies by 2030.

India demonstrates growing ambitions through policies including incentives for domestic manufacturing and mandates for clean energy deployment. The Dhirubhai Energy Complex is scheduled to start operations in 2026, aiming to host gigafactories of solar panels, batteries, and electrolyzers under one roof.

The supply chain restructuring is fueling business travel growth, particularly in mining and technology sectors, and driving faster recovery in cross-border commercial payments. Small businesses are adopting generative AI faster than consumers, with AI-integrating firms showing significantly higher transaction growth. While North American tech hubs lead in absolute AI adoption, faster growth abroad suggests global markets may produce the next wave of AI-driven business models.