A new report from the McKinsey Global Institute reveals that geopolitical tensions are restructuring global trade patterns, with the United States and China at the center of the realignment. The analysis, which examines trade data up to 2024, shows that economies are increasingly operating with geopolitically aligned partners and less with rivals.
The report cites the ongoing US-China trade tensions and Russia’s invasion of Ukraine as key drivers of the trend. “The most significant continuing shift in trade patterns is a drop in the average geopolitical distance of trade,” the authors noted. This measure decreased by approximately 7% between 2017 and 2024, reflecting reduced trade between economies at opposite ends of the geopolitical spectrum.
The key metric that allows McKinsey to make this kind of rigorous, quantified data-based analysis is its notion of “geopolitical position,” which according to the report is calculated via a principal component analysis of UN General Assembly voting records from 2005 to 2022. The voting records allow McKinsey to assign geopolitical position scores to each country, and from there calculate their geopolitical distance from each other.
(Chart: McKinsey Global Institute)
The United Sta …
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