Trade Flows and the Gap Between Numbers and Reality
After my last Postcard from Shanghai and the reflections on supply chains, I wanted to go a step further. Curiosity pushed me to confront the story told in the press with what both the statistics and the ground reality show. The headlines keep showing deglobalization, reshoring, tariffs working, industries decoupling, but does any of this actually appear in the data? And even more importantly, does it appear in the markets where companies and investors operate?
The economic logic behind tariffs is well known. In theory, they are designed to protect domestic industries from foreign competition, reduce trade deficits, or rebalance unfair situations created by dumping, subsidies, or currency manipulation. Textbooks even explain that in the case of a large economy like the United States, tariffs can improve the terms of trade: by limiting imports, a country may force exporters to lower prices, thus buying cheaper while selling more expensively abroad. It is an elegant theory that goes back more than a century, but one that most economists ultimately consider welfare-reducing. Tariffs distort trade flows, make consumers pay more, and encourage the survival of inefficient producers who are often better at lobbying than competing.
Still, tariffs are politically seductive, and they remain central to the narrative of deglobalization. But the question is: do the numbers back this up?
Looking at US trade figures since October 2020, we can see that imports have increased by 68 percent, while exports rose by only 42 percent. Instead of regaining balance, the United States has widened its dependency. The picture becomes even more striking when we isolate medium and high-technology manufactured goods. What used to be a steady stream of around USD 170billion of imports per month has surged to almost USD 350 billion at peak.
On the other side, China continues to dominate global trade. It remains the world’s largest net exporter, accounting for around 20 percent of total exports. Between November 2024, when Trump was elected, and May 2025, US exports increased by just over 8 percent, imports barely moved, and China’s own exports slipped by less than half a percent. Hardly the collapse one would expect after years of tariff rhetoric. At the same time, Chinese imports actually grew by more than two percent, showing resilience in both directions.
The industrial production indices confirm how global manufacturing power has shifted. China’s lead in chemicals is overwhelming, the result of long-term strategic planning that has given it control over the majority of rare earths and strategic chemicals worldwide. Vietnam is the standout newcomer: since 2023 it has accelerated manufacturing so dramatically that by 2024 it employed more people in manufacturing than the United States. Turkiye, for a moment a fast-growing industrial hub, has been losing a bit of its momentum since 2022.
The gap between the political message and the lived reality is striking. The media insists that deglobalization is underway, that tariffs are rewriting the map of global trade, that companies are coming home. Yet the numbers suggest something else entirely. Trade flows continue to grow, supply chains adapt with remarkable speed, and the so-called collapse of globalization does not show up in the data.
Investors who build allocations based purely on political headlines risk being misled. A portfolio tilted toward what the press calls the “winners” of deglobalization may end up overweight companies that benefit only from short bursts of narrative rather than from durable structural shifts. The danger is exposure not to fundamentals but to what I call news volatility, the swings provoked by headlines rather than by lasting changes in demand, supply, or competitiveness.
On the ground, companies are still producing, trading, and hiring. Supply chains continue to stretch across borders. Tariffs create noise, but they do not erase the logic of efficiency and scale that drive global commerce. Investors who fail to look beyond the political story risk confusing the theater of trade policy with the reality of economic life.
It is very unlikely that China falls completely because Trump has decided to impose tariffs on imports. Also, another lesson I learned studying economics, everything in politics is about equilibrium. If you shoot at your entire list of trade partners, it is very likely that they are going to become closer to shoot you down in return. In fact there have been many collaborations and partnerships (here is a great article about it) that emerged from Trump’s tariff frenzy. It’s exactly like when your boss is a crazy maniac that yells on everyone. It gets the team members (the victims) closer and stronger together.
So maybe we should thank Trump for increasing collaborations across states and making us less dependent on the US for global trade!
Sources: all the numbers come from the World Bank and UNIDO (United Nations Industrial Development Orgnaization)