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

Francesco Conteduca, Simona Giglioli (), Claire Giordano, Michele Mancini and Ludovic Panon
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Simona Giglioli: Bank of Italy

No 881, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

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.

Keywords: globalization; trade decoupling; supply chains; advanced technology products (search for similar items in EconPapers)
JEL-codes: D57 F01 F10 (search for similar items in EconPapers)
Date: 2024-10
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Working Paper: Trade Fragmentation Unveiled: Five Facts on the Reconfiguration of Global, US and EU Trade (2024)
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