US President Donald Trump’s first term in 2017 transformed global trade: McKinsey

The global trade system has been profoundly reshaped since US President Donald Trump’s first term, with countries’ decisions increasingly driven by geopolitical considerations, according to a new report by McKinsey.

The findings raise pressing questions about how Trump may further influence these dynamics over the next four years, with his repeated tariff threats making headlines even before his inauguration.

“The most significant ongoing shift in trade patterns is a fall in the average geopolitical distance of trade,” said the report, which was released on Monday.

The measure, which gauges how far apart trade partners are in terms of political and economic ideologies, declined by about 7 per cent between 2017 and 2024, the report noted.

This indicates a shift toward trading with partners that share similar systems or values, such as the US deepening its ties with fellow democracies.

The report also pointed to a steady decline in China’s share of US imports across most sectors since 2017, with electronics, machinery and textiles experiencing the sharpest drops – each falling by 14 to 16 percentage points.