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Trade fragmentation unveiled: five facts on the reconfiguration of global, US and EU trade

Author

Listed:
  • Francesco Paolo Conteduca

    (Bank of Italy)

  • Simona Giglioli

    (Bank of Italy)

  • Claire Giordano

    (Bank of Italy)

  • Michele Mancini

    (Bank of Italy)

  • Ludovic Panon

    (Bank of Italy)

Abstract

We examine recent changes in trade patterns amid rising geoeconomic fragmentation and present five key findings. First, a broad retreat from globalization is not taking place. Second, selective decoupling along geopolitical lines is ongoing, mostly driven by the weakening of specific trade relationships. Third, the US has been reducing its dependency on China since 2018, while the EU saw a decline only in 2023, driven mostly by a few advanced technology products (ATPs). Fourth, not all dependencies on China are decreasing: the US and EU are increasingly importing Chinese goods critical to the green transition. Fifth, US supply chains from China are lengthening, with intermediate production stages shifting to third countries. Granular data for Italy show that a growing share of ATPs imported from other EU economies are of Chinese origin, suggesting that reductions in dependencies on China may be less significant than those emerging from aggregate data even for a large EU country.

Suggested Citation

  • Francesco Paolo Conteduca & Simona Giglioli & Claire Giordano & Michele Mancini & Ludovic Panon, 2024. "Trade fragmentation unveiled: five facts on the reconfiguration of global, US and EU trade," Questioni di Economia e Finanza (Occasional Papers) 881, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_881_24
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2024-0881/QEF_881_24.pdf
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    More about this item

    Keywords

    globalization; trade decoupling; supply chains; advanced technology products;
    All these keywords.

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • F10 - International Economics - - Trade - - - General
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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