Davos 2026: Globalisation is now splintering into a multi-nodal trade system, says WEF

Amid rising geopolitical tensions, trade wars and economic nationalism, the global trading system is not breaking down — but it is being fundamentally reshaped, the World Economic Forum (WEF) said in a report ahead of the much awaited Davos Summit. According to the WEF, the world is moving away from both extremes: neither sliding into all-out trade conflict nor returning to a fully rules-based, multilateral system anchored by institutions like the World Trade Organization (WTO). 

Instead, a more pragmatic and increasingly likely outcome is emerging — what the WEF describes as a “multi-nodal trade patchwork.” 

What is the ‘multi-nodal trade patchwork’? 

The concept refers to a fragmented but functional global trade system organised around four major trade nodes, each with distinct priorities, alliances and rules. In this scenario, global trade continues to grow, but along re-routed pathways shaped by geopolitics, industrial policy and strategic partnerships rather than universal trade rules. 

Despite dramatic headlines over tariffs and decoupling, the WEF notes that global trade has not collapsed. Instead, it is in transition, driven by long-standing trends such as economic nationalism, supply-chain security concerns and the weakening of global institutions. 

Why this scenario matters now 

The WEF highlights that momentum toward either extreme — a full-scale tariff war or a revival of global trade governance — has slowed. Crucially, the world has not yet entered a phase of retaliatory tariff escalation. That pause has created space for a middle-ground outcome that is complex, uneven and politically charged, but still growth-oriented. 

In this volatile environment, trade outcomes are best understood through scenarios rather than forecasts, allowing governments and businesses to stress-test decisions in an uncertain world. 

The four nodes shaping global trade 

According to the WEF, the emerging trade patchwork is structured around four major blocs: 

1. The United States: The US is shifting away from its traditional role as the chief advocate of rules-based global trade. Under an “America First” approach, it is deploying industrial policy, subsidies and trade interventions to rebuild domestic manufacturing, reduce trade deficits and bring jobs back home. 

2. China: China remains engaged in select multilateral agreements but is increasingly focused on self-sufficiency. It is deepening trade ties with the Global South while prioritising secure access to raw materials and end markets. China has already become the largest trading partner for nearly half of developing economies. 

3. Plurilateralists: This diverse group spans advanced economies such as the European Union, Japan, Canada and Australia, alongside emerging economies including Mexico, Vietnam and Peru. These countries rely on plurilateral trade agreements — deals involving multiple but not all economies — accepting some domestic compromises to preserve rules-based cooperation. 

4. BRICS+ (excluding China): While these countries view trade as a growth engine, they are generally less willing to cede sovereignty through deep trade agreements. This limits their integration with plurilateral blocs, even as trade among Global South nations continues to expand. 

What happens to global trade growth? 

In a trade patchwork world extending to 2034, the WEF outlines several key outcomes: 

• Global goods trade remains resilient, expanding by around 2.5% annually, slightly faster than global GDP, even as supply routes shift. 
• Plurilateral economies experience above-average trade growth among themselves and with much of the Global South. 
• China’s trade grows faster than that of the US, but below the global average, as it strengthens South-South trade links. 
• The US share of global trade declines, with trade growth of about 1.5% annually, reflecting its focus on domestic production rather than export expansion. 
• Trade among Global South economies continues to rise, reinforcing diversification away from traditional Western hubs. 

What this means for businesses & govts 

The WEF warns that a trade patchwork system will be more complex and costlier than the old rules-based order, demanding stronger compliance capabilities and strategic agility. 

For businesses, success will depend on: 

• Integrating geopolitics into core decision-making 
• Building transparent, flexible and diversified supply chains 
• Driving cost productivity through technology, automation and strategic pricing 

For policymakers, priorities include: 

• Reassessing national competitive advantages in strategic value chains 
• Defining trade partnerships that balance sovereignty with cooperation 
• Simplifying regulations to attract investment and skilled talent 

According to the World Economic Forum, globalisation is not over — it is evolving. The emerging trade patchwork may lack the simplicity of a single global rulebook, but it still rewards foresight, adaptability and strategic alignment.