Global Trade Growth Relies on AI Infrastructure as Traditional Goods Contract

In 2025, the total value of global merchandise trade reached $26.26 trillion, representing a 7% nominal increase over the previous year. The World Trade Organization recorded a 4.6% expansion in physical trade volume, significantly outpacing the 2.9% growth in global gross domestic product.[1]

That headline expansion suggests a robust recovery in international commerce, but the aggregate figure conceals a severe structural divergence. A single sector—artificial intelligence infrastructure—generated nearly half of the world's total trade growth, while traditional manufacturing and consumer goods segments contracted or stagnated.[1][2]

The WTO's March 2026 Global Trade Outlook and Statistics report details this bifurcation, revealing that AI-enabling goods accounted for 42% of total global trade growth in 2025. These products represent only one-sixth of global trade by volume, yet their disproportionate surge carried the broader indices into positive territory.[1]

Trade in AI-enabling goods increased by 21.9% year-on-year, rising from $3.43 trillion in 2024 to $4.18 trillion in 2025. This category includes semiconductors, processors, data transmission equipment, and the specialized hardware required to build hyperscale data centers.[1]

By contrast, trade in all other merchandise grew by just 4.9% in nominal value, and much of that increase was driven by price inflation in specific commodities rather than broad-based volume expansion. Non-monetary gold, for example, saw its traded value rise by nearly 50% between January and November 2025 due to double-digit price increases.[1]

Pharmaceutical ingredients also inflated the non-AI baseline, specifically the hormones used in anti-obesity and diabetes treatments. Together, precious metals and pharmaceuticals accounted for at least two percentage points of the overall 7% increase in global merchandise trade value, leaving traditional industrial and consumer goods essentially flat.[1]

The AI Investment Distortion

The concentration of trade growth in AI infrastructure reflects a massive shift in global capital allocation. In North America, spending on AI-related products accounted for approximately 70% of total investment growth during the first three quarters of 2025.[1]

This represents a profound change in the composition of gross fixed capital formation. For comparison, during the housing boom between 2004 and 2007, residential construction accounted for an average of 30% of investment growth in North America.[1][2]

The shift toward digital infrastructure fundamentally alters the trade intensity of economic growth. Construction typically has an import intensity of less than 2%, meaning domestic labor and materials fulfill the demand.[1]

Computer equipment and AI hardware, however, carry an import intensity of 70% to 90%. When capital flows out of domestic construction and into data centers, the resulting economic activity generates a massive corresponding surge in cross-border component shipments.[1][2]

Asia captured the vast majority of this production demand, contributing 71% of total world merchandise trade volume growth in 2025. The region's exports of AI-enabling goods grew by 24.3%, cementing its position as the dominant supplier of semiconductors and electronics components.[1]

North America recorded the fastest regional growth rate in AI-enabling goods trade at 32.4%, driven almost entirely by import demand for data center hardware. Europe followed with a 10.6% expansion in AI-related trade, while other regions saw negligible participation in the sector.[1]

The US Import Microcosm

United States import data provides the clearest illustration of the dual-track global economy. Overall US merchandise imports grew by 4.4% in 2025, but that figure is the sum of two opposing trajectories that crossed midway through the year.[1]

US imports of AI-enabling goods grew by 38.3% over the year, contributing 5.4 percentage points to the overall import growth rate. This structural expansion persisted across all four quarters, immune to the tariff policies that disrupted other sectors.[1]

Meanwhile, imports of all other goods contracted by 1.2%, subtracting 1.0 percentage point from the national total. This contraction occurred despite a massive surge in the first quarter of 2025, when importers frontloaded shipments to beat anticipated tariff increases.[1]

During that first quarter, non-AI imports added 20.2 percentage points to US import growth. Once the new tariffs took effect mid-year, the contribution of non-AI goods reversed, dropping to negative 6.6 percentage points in the third quarter and negative 11.4 percentage points in the fourth.[1][2]

The contraction hit major industrial and consumer categories simultaneously. Non-AI machinery, non-AI electronics, vehicles, apparel, textiles, plastics, and paper products all registered negative growth for the year, indicating a broad-based decline in US import demand outside of the technology sector.[1]

Crucially, the few non-AI categories that did show positive growth—such as gold, cocoa, and specific base metals like copper and lead—were largely exempt from the new tariff regimes. The data suggests that where tariffs were applied, trade volumes fell sharply.[1]

China Export Capacity and Rerouting

As US import demand for traditional goods weakened, China redirected its massive manufacturing capacity toward alternative markets. China's total merchandise exports rose 5.5% in value terms to $3.77 trillion in 2025, while export volumes surged by 9.2%.[1]

This volume growth, achieved despite falling export prices, contributed approximately 1.3 percentage points to total global export growth. China maintained its 14.4% share of total world export value by finding new buyers for goods that previously flowed to North America.[1]

Direct exports from China to the United States fell by roughly 20% in 2025, a decline of approximately $105 billion. However, China's exports to the rest of the world increased by almost three times that amount, surging by $301 billion.[1][2]

Shipments to the European Union increased by 8.4%, while exports to the Association of Southeast Asian Nations rose by 13.4%. Developing regions absorbed significant volumes, with exports to Africa jumping 25.8% and shipments to South America increasing by 11.8%.[1]

This redirection resulted in a massive expansion of China's overall trade surplus, which rose from $993 billion in 2024 to $1.19 trillion in 2025. The $196 billion increase was driven predominantly by widening surpluses with Europe, Asia, and Africa.[1]

The data indicates that excess capacity in Chinese industries prompted firms to lower prices and expand exports to maintain production levels amid subdued domestic demand. These lower prices supported strong consumption of Chinese vehicles, machinery, and electronics in emerging markets.[1]

The Decline of MFN Trade

The rerouting of global supply chains coincides with a historic erosion of the multilateral trading system's foundational rules. The share of world trade conducted on most-favored-nation terms fell to 72% by February 2026, down from 80% at the start of 2025.[1]

The MFN principle requires that any trade advantage granted to one WTO member must be extended to all others. The rapid decline in MFN-compliant trade reflects an unprecedented wave of unilateral tariff actions and preferential agreements that discriminate between trading partners.[1][2]

This policy shift has accelerated the decoupling of the world's two largest economies. Between 2018 and 2024, bilateral trade between the United States and China grew 30% more slowly than each country's trade with the rest of the world.[1]

In 2025, US imports from China declined by 29%, reducing China's share of the US market from 13.8% to 9.3% in a single year. Simultaneously, the US increased imports from India, Indonesia, the Philippines, Chinese Taipei, Thailand, and Vietnam.[1]

Many of these same Asian economies recorded massive increases in their own imports from China. This pattern suggests that global supply chains are lengthening, with Chinese intermediate goods flowing through third countries for final assembly before reaching the North American market.[1][2]

However, value-added trade statistics indicate that indirect linkages through third countries account for only a small fraction of the decline in direct US-China trade. The decoupling appears to be a genuine reduction in economic integration rather than merely a rerouting of identical trade flows.[1]

Energy Shocks and the Middle East

While tariffs reshaped manufacturing supply chains, geopolitical conflict in the Middle East introduced severe volatility to global energy and transport networks. The WTO projects that merchandise trade volume growth will slow to 1.9% in 2026, but that baseline assumes stable energy prices.[1]

If the disruption of shipments through the Strait of Hormuz persists, elevated oil and liquefied natural gas prices could shave 0.5 percentage points off that forecast, reducing 2026 trade growth to just 1.4%.[1]

Crude oil prices reached $90 per barrel by March 2026, while LNG prices in Asia climbed to $16 per million British thermal units. These elevated costs act as a tax on global economic activity, potentially reducing world GDP growth from 2.8% to 2.5% for the year.[1]

The Strait of Hormuz chokepoint also threatens global food security. The Gulf region exports approximately one-third of the world's urea and ammonia fertilizers. Prolonged supply interruptions could force farmers worldwide to reduce fertilizer application or shift to less input-intensive crops.[1][2]

Major agricultural producers are highly exposed to this specific supply chain. In 2025, imports from the Persian Gulf accounted for 35% of Brazil's urea imports, 40% of India's, and 70% of Thailand's.[1]

The conflict's impact on commercial services trade is expected to be even more severe than its effect on merchandise. The WTO estimates that sustained disruptions to international transport and travel could subtract 0.7 percentage points from services trade growth in 2026.[1]

Services Trade and Digital Delivery

Before the Middle East disruptions escalated, global commercial services exports reached $9.56 trillion in 2025, representing an 8% nominal increase and a 5.3% expansion in volume.[1]

The composition of services trade is shifting rapidly toward digital delivery. Exports of digitally delivered services—including financial, computer, and professional services—reached $5.26 trillion in 2025, accounting for 15.2% of total world exports of goods and services.[1]

Computer services alone expanded by 11% in 2025, marking the third consecutive year of double-digit growth. The value of computer services exports has more than doubled since 2019, reaching $1.22 trillion and capturing a 13% share of all services trade.[1]

This growth is directly linked to the AI infrastructure boom observed in the merchandise data. As firms deploy the physical hardware for artificial intelligence, they simultaneously increase their cross-border consumption of cloud computing capacity, data processing, and software development.[1][2]

The integration of AI into service delivery is already measurable. In the European Union, AI-enabled services exports reached an estimated $525 billion in 2024, up from $230 billion in 2022.[1]

More than half of the EU's information and communications technology exports are now classified as AI-enabled, alongside 18.2% of other business services. This transition suggests that artificial intelligence is moving from a capital expenditure phase into an operational phase, fundamentally altering how cross-border services are produced and delivered.[1]

Port Traffic and Future Indicators

Early indicators for 2026 suggest that the momentum in Asian manufacturing has carried into the new year. The RWI/ISL Global Container Throughput Index reached 144.7 in January 2026, representing a 6.1% year-on-year increase in physical port traffic.[1]

This port activity remains highly localized. Container throughput at Chinese ports surged by 11.4% in January, while ports in the rest of the world managed only a 2.7% increase. Northern European ports saw their traffic growth collapse from 13.4% in December 2025 to just 0.3% in January 2026.[1]

Purchasing Managers' Indices confirm this geographic divergence. The global new export orders index for manufacturing rose to 51.4 in February 2026, indicating expansion, but the growth was concentrated in China, Japan, and the Republic of Korea.[1][2]

The ultimate trajectory of global trade in 2026 depends on whether the artificial intelligence investment cycle can sustain its current velocity. If AI spending remains robust, it could add 0.5 percentage points to global trade growth, perfectly offsetting the projected losses from Middle East energy shocks.[1]

However, if the hyperscaler infrastructure build-out decelerates, the underlying weakness in traditional consumer and industrial goods will dictate the global baseline. The global economy has tethered its trade expansion to a single technological transition, leaving the broader manufacturing base waiting for a recovery that tariffs and fragmentation continue to delay.[1][2]