Global trade is proving more durable than expected in the face of tariffs and geopolitical tensions, with artificial intelligence-driven investment and a shift towards regional supply chains underpinning growth, according to a new report by Citigroup.
In its 2026 Supply Chain Financing report, compiled by Citi Institute in collaboration with Citi Services, the bank said global trade had “shaken off prevailing challenges” for four consecutive years, even as policy uncertainty and higher tariffs disrupted markets in 2025.
The effective U.S. tariff burden on imported goods has risen to around 16.8 per cent from 2.4 per cent before President Donald Trump’s inauguration, the report said. Yet while tariffs were resource-intensive to manage, their broader business impact had so far been limited, with some investment delayed but rarely abandoned.
“Global trade is not in retreat – it is evolving,” the authors wrote, pointing to regionalisation and diversification as established corporate strategies rather than tactical responses to shocks.
AI Capex Drives Cross-border Flows
A central theme of the report is the scale of capital expenditure linked to artificial intelligence. Citi Research estimates global capex related to AI demand could reach USD 7.75 trillion by 2030.
Spending on data centres, energy infrastructure and advanced manufacturing is boosting cross-border flows of goods and components, even as longer-term monetisation questions remain, the bank said.
Analysis cited in the report shows that of an expected USD 6.7 trillion in data centre capex to 2030, roughly USD 400 billion could be directed towards power infrastructure, supporting demand for renewables and grid upgrades.
Private markets reflect the same shift. Generative AI attracted USD 176.59 billion in private capital between 2020 and October 2025, far exceeding other sectors such as quantum computing, fusion energy and decentralised finance, according to the report’s data.
Treasurers are also adopting the technology rapidly. Thirty-six per cent of survey respondents said they were using artificial intelligence in treasury functions, a sharp increase from previous years.
AI is reshaping trade finance itself, Citi said, through intelligent document processing, predictive risk tools and automated underwriting for small and medium-sized enterprises (SMEs), a segment long considered underserved.
Multipolar Trade Network Emerges
Beyond technology, the report highlights a structural rewiring of global goods flows between 2019 and 2024.
Export growth from North and East Asia has shifted towards emerging markets, with shipments to Latin America up 59 per cent, to the Middle East and Africa up 52 per cent, and to South Asia and ASEAN up 44 per cent over the period.
At the same time, U.S. imports from South Asia and ASEAN rose 50 per cent and from Latin America 43 per cent, outpacing the 32 per cent increase from North and East Asia, reflecting efforts by U.S. firms to diversify sourcing.
China’s goods trade surplus exceeded USD 1 trillion in the first 11 months of 2025, the report said, even as exports to the United States fell sharply. Exports to Southeast Asia grew at nearly double the pace of the previous four years, suggesting supply chains are being rerouted via intermediary countries.
Shipping data showed a 28 per cent surge in container volumes ahead of the initial implementation of higher U.S. tariffs in 2025, followed by a return to more normal levels as exemptions and negotiations eased pressure.
“Disruption is no longer a bug in global trade – it is a feature,” the report said, adding that diversification and redundancy had shifted from perceived costs to strategic assets.
FDI Volatile But Strategy Intact
Foreign direct investment fell 3 per cent globally in the first half of 2025 compared with the 2024 half-year average, driven by a 7 per cent drop in developed economies and a 25 per cent fall in Europe.
However, Citi characterised the decline as a postponement of some investment plans rather than a reversal of long-term strategy, noting that three of the four largest greenfield projects announced in the first half of 2025 were in the United States, many linked to semiconductors or data centres.
Overall payment flows processed through Citi’s network rose 17 per cent year-on-year in 2025, with healthcare posting 25 per cent growth, further evidence, the bank said, that global trade activity remains robust.
The picture that emerges is “neither complacent nor alarmist”, Citi said, arguing that while geopolitical tensions and policy uncertainty remain elevated, innovation, investment and operational agility are sustaining trade in a more fragmented, multipolar world. |
