For most of his time in office, President Donald Trump has waged a global battle to rebalance trade in the U.S.’s favor. An escalating trade dispute with China has already led to tariffs on hundreds of billions of dollars in goods and months of high-level negotiations, including talks scheduled this week that were called into question after Trump threatened to further raise tariffs. But these efforts aren’t likely to halt the shift in global trade toward the developing world. And China is far from the only nation challenging the status quo.
Twenty years ago, 62 percent of all bilateral trade was between just rich countries—namely the U.S., Canada and Europe—according to a Bloomberg analysis of UN Comtrade data where both trading partners are known. Now that share is down to 47 percent as developing countries become more prominent trading partners. The value of trade between emerging economies is up 10-fold during that period.
While trade with Latin American and African countries has grown rapidly, the real emerging-market counterweight has come from the East: namely China, India and Southeast Asia. This continues a similar trend identified in a 2012 McKinsey Global Institute report, which mapped the worlds economic centre of gravity as it moved from northern India 1,000 years ago to the North Atlantic in the 1900s to central Russia now, en route to China.
Fifty-three percent of bilateral trade now involves at least one emerging market, up from 38 percent in 1997. Though trade between two developing countries remains a relatively small share of the total—14 percent in 2017—it’s on pace to make up a majority of global commerce before the end of the century.
The number of countries where the majority of trade is with emerging markets is also up sharply, to 64 from 19 two decades ago.
This shift has led key producing regions of the developing world to loosen their reliance on demand from wealthier markets. This means more food, energy, building materials and consumer goods are now flowing to some of the poorest areas of the world, delivering a much-needed boost to local living standards.
These are some of the products behind this historic trade reshuffle. In almost every case, the U.S. and Japan saw the deepest declines in imports from developing markets.