The Tariff Paradox | Why Global Trade Is Thriving Despite Protectionism

Global trade is defying protectionist headwinds, with flows on track to exceed $35 trillion in 2025—growing at 7 percent, double last year's pace. The artificial intelligence and semiconductor boom has been the primary engine, lifting Taiwan, South Korea, Malaysia, and Singapore to record export figures. China, despite an 18.9 percent drop in US-bound shipments, achieved a historic $1 trillion trade surplus by aggressively diversifying toward Europe, ASEAN, and Africa. However, the outlook carries significant caveats: much of the 2025 surge reflects front-loading ahead of anticipated tariff escalations, and momentum is already slowing. Semiconductors remain subject to ongoing US national security investigations, and concentration risk in technology exports leaves several economies vulnerable. Regional supply chain integration is accelerating as ASEAN economies coordinate to mitigate tariff uncertainty, but the durability of these adaptations will be tested as global growth decelerates and policy fragmentation deepens into 2026.