The latest round of tariffs launched by the US government in early April prompted a wave of criticism from world leaders, including some who say globalisation is now dead. Globalisation isn’t dead. It is, however, changing in a significant way.
There are valid reasons for globalisation to go through a policy refresh — at least, the type of globalisation that we’ve become accustomed to since the early 1970s when trade expansion started a meteoric rise. In fact, the tectonic plates of world trade have been shifting for some time. Today’s changes feel seismic, but trade as a percent of world GDP has moved roughly sideways since the global financial crisis between 2007 and 2009.
A decade later the Covid-19 pandemic revealed some of the problems associated with globalisation, as did the Russia-Ukraine war. Both events exposed the vulnerabilities of global supply chains that rely too heavily on single trade routes.
Globalisation marches on — at a different pace
Sources: Capital Group, OECD, World Bank. World trade is calculated as the sum of exports and imports of goods and services and represented as a share of global gross domestic product (GDP). Latest data available is through 2023, as of 17 April 2025.
Since then, we have learned important lessons. Countries and companies have sought to diversify supply chains and bring some manufacturing back home, or closer to home, so everyone can get what they need to keep their economies thriving.
The new path of globalisation
While it is unlikely that the US will return to its former status as a manufacturing powerhouse, there is a clear shift towards greater self-reliance – especially in critical sectors like semiconductors, medical supplies and pharmaceuticals.
The actions of the current US administration are reinforcing the message that the US is seeking to reshape the path of global trade, not end it. You might call it “Globalisation 2.0” — a more robust, diverse and multi-faceted form of globalisation.
US companies see the importance of expanding their operations at home, a trend underscored by Apple’s recent commitment to spend $500 billion on new US-based facilities over the next four years. Many manufacturers around the world are following the same playbook. Computer chipmaker Taiwan Semiconductor is the poster child for this movement, building new fabrication plants in Arizona, Germany and Japan.
Long-term investment opportunities
Against this backdrop, I remain optimistic about investment opportunities that will inevitably come from these shifting trade winds.
Globalisation isn’t coming to an end. It is adapting to a changing set of circumstances. It may seem like a daunting task, but there are trade negotiations to be held. There are deals to be struck. And there are supply chains to shore up.
The road ahead may be bumpy, and financial markets may continue to convulse with every news headline. It may take a few years to reach the destination. But the key question is: Can we get to a better place?
As long as the goal remains Globalisation 2.0 and not isolationism, I think we can.
By John Lamb, Equity Investment Director at Capital Group
