Deglobalization [2026]: Is the World Actually Becoming Less Connected?

Deglobalization — the reversal of the economic integration trend that accelerated from the 1990s through 2008 — has been declared repeatedly since the 2008 financial crisis, Brexit, the US-China trade war, COVID-19 supply chain disruptions, and the Russia-Ukraine war. The honest assessment of whether deglobalization is actually occurring requires distinguishing between genuinely slowing global integration and the reshaping of integration patterns without overall reversal. Here is what the data shows.

What the Trade Data Actually Shows

Global merchandise trade as a percentage of GDP peaked at approximately 25% in 2008, declined during the financial crisis, partially recovered, and has plateaued rather than returned to pre-crisis growth rates. The World Trade Organization's trade growth forecasts have been repeatedly revised downward since 2011 as merchandise trade grew more slowly than global GDP — reversing the "hyperglobalization" period of 1990-2008 when trade grew twice as fast as GDP. Services trade (financial services, technology, consulting, tourism) has been more resilient than goods trade and has partially compensated for goods trade stagnation.

The US-China trade relationship provides the most studied case of potential deglobalization. US-China bilateral trade declined as a percentage of total US trade following tariff escalation from 2018. Total US imports from China fell. However, much of the change represents trade diversion rather than deglobalization — goods previously imported from China are now imported from Vietnam, Mexico, and India, which have seen export growth corresponding to China's decline. The intermediate goods still often involve Chinese components, meaning supply chains have become more complex without necessarily becoming shorter or more domestic.

Friendshoring and Reshoring: Reality vs Rhetoric

The political language of "reshoring," "friend-shoring," and "supply chain resilience" has been extensive since COVID-19 disruptions highlighted vulnerabilities of globally integrated supply chains. The actual investment data shows: some genuine reshoring of semiconductor manufacturing (US CHIPS Act, EU Chips Act, and equivalent policies in Japan and South Korea have catalyzed semiconductor fab investment); continued offshoring for most labor-intensive manufacturing where cost differentials remain large; and near-shoring (moving production closer but not domestically — Mexico for US, Eastern Europe for Western Europe) rather than full reshoring in many industries.

Honest Bottom Line: Global trade growth has slowed since 2008 (goods trade growing slower than GDP) but has not reversed — the "deglobalization" narrative overstates what the data shows. US-China trade diversion (to Vietnam, Mexico, India) has occurred but often with Chinese components still embedded — supply chains have become more complex rather than shorter. Semiconductor reshoring (CHIPS Act, EU equivalent) represents genuine domestic investment; most labor-intensive manufacturing continues to offshore where cost differentials remain. "Slowbalization" (slower integration) better describes the data than deglobalization (reversal of integration).