What: BCG forecasts dramatic shifts in global trade patterns through 2033, with proposed US tariffs potentially reshaping supply chains while China's trade with the Global South surges by $1.25 trillion.

Why it is important: The projected trade shifts represent a critical turning point for retailers, requiring them to balance increased tariff costs against the need for supply chain resilience, while adapting to the growing economic influence of the Global South.

Global trade patterns are undergoing a significant transformation driven by geopolitical rivalries and economic security considerations. BCG's analysis reveals that while world trade will continue growing at 2.9% annually through 2033, the routes goods travel will change dramatically. A potential 60% tariff on Chinese goods could add $640 billion to US import costs, particularly affecting consumer electronics, electrical machinery, and fashion goods. North America is solidifying as a resilient trade bloc, with US-Mexico trade projected to increase by $315 billion and US-Canada trade by $147 billion by 2033. Meanwhile, China is pivoting toward the Global South, with trade expected to surge by $1.25 trillion, despite contracting trade with Western nations. The Global South itself is emerging as a significant force, with trade among developing nations projected to expand by $673 billion. These shifts are accompanied by strategic changes in the EU's trade relationships and ASEAN's growing role in global supply chains. For businesses, success will depend on developing agile supply chains and the ability to sense and react to geopolitical shifts in this new, fast-moving reality.

IADS Notes: The BCG report's findings align with significant shifts observed in global trade throughout 2024. As noted in November 2024, fashion brands were already restructuring their sourcing strategies in response to evolving trade policies , while December 2024 saw China implementing measures to streamline e-commerce exports despite Western regulatory challenges . The projected impact of US tariffs parallels broader trends in supply chain transformation, with January 2025 reports showing retailers abandoning traditional one-size-fits-all models in favor of more agile, regionally-adapted approaches . This shift is particularly evident in emerging markets, where India's retail sector is projected to reach $2 trillion by 2033 , and Southeast Asia is becoming a key battleground for retail expansion . The Global South's rising prominence is further validated by the establishment of Free Trade Warehousing Zones , offering new supply chain solutions as companies navigate these geopolitical shifts.

US tariffs set to accelerate landmark shifts in global trade flows, Press Release

BCG report: Great Powers, Geopolitics, and the Future of Trade