Governments around the world are recalibrating trade policies in response to shifting geopolitical alignments, according to a recent McKinsey Global Institute analysis. The report finds that the average geopolitical distance of trade has declined by 7% since 2017, signaling a growing preference for economically aligned partners—especially among large economies like the U.S., Germany, and China. For policymakers
At the same time, developing economies such as India, Brazil, and ASEAN nations are expanding trade relationships across the geopolitical spectrum, playing a pivotal role in a new multipolar trade system. These regions are not just diversifying trade—they’re becoming critical intermediaries. Vietnam, for instance, has seen explosive growth in electronics exports to the U.S., much of which contains value added from China. For government advisors and trade policy experts, the lesson is clear: navigating today’s trade environment requires more than bilateral agreements. It demands a deep understanding of supply chain interdependencies, sector-specific vulnerabilities, and the nuanced role geopolitics plays in shaping economic ties. Consulting firms that can help governments assess import concentration, map geopolitical exposure, and build adaptive trade strategies will be essential partners in the years ahead.
