Outlook 2026: What comes next in global trade, and where does India fit in?

The past year has been anything but steady for global trade. We saw shifting policies, tariff announcements, and geopolitical tensions dictate the course of trade, which kept organisations and investors guessing. While some of that volatility may now feel familiar, its full impact is still playing out. Take, for instance, the U.S. trade tariffs. Their impact is likely to be felt more sharply in 2026.  

The numbers that are coming out tell a similar story. UNCTAD expects global growth to slow down to around 2.6%, falling below pre-pandemic averages. Similarly, WTO projects global trade volume growth to ease to roughly 0.5% in 2026, down from about 2.4% in 2025. This illustrates how world trade is navigating a complex landscape.

As businesses and policymakers navigate a slower, more complex global environment, what are the key global drivers to watch in the new year?

1. Tariff and trade policy dynamics: When it comes to current global trade, uncertainty is the new certainty. Nobody knows where trade policies are headed, especially when it comes to tariff impositions. Recent estimates reveal that about 72% of global trade professionals rank U.S. tariff volatility as the most impactful regulatory change. For many countries and companies, navigating this has come at a cost. Higher tariffs have decreased manufacturing margins, which have also had adverse effects on the quality of products. Besides, tighter checks on product classification and country-of-origin rules have added to compliance pressure. Today, agreements are being negotiated across regions to get favourable trade terms, slowly reshaping trade flows.

Going ahead, volatility is expected to continue, with 76% of trade professionals anticipating that the new U.S. tariffs signal a long-term shift in trade policy—likely to remain for at least four years—rather than a temporary measure. While retaliatory responses against the tariffs have been relatively measured so far, long-term stability will depend on more predictable and balanced trade strategies.

2. Tech impact and AI: Emerging tech, particularly AI, is expected to be one of the bright spots for global trade. AI-related goods, including semiconductors and telecommunication equipment, have seen accelerated demand, as there has been a substantial increase in global AI usage. AI-related spending drove nearly half of global trade in the first half of 2025, rising 20% year-on-year in value terms. This favourable demand has turned emerging markets in Asia into strong manufacturing and export hubs. In the year ahead, we could see AI-related products boost global trade. For instance, the global semiconductor market, estimated to touch $1 trillion in 2026, provides optimism. That said, policy uncertainty and trade restrictions remain a real risk to this momentum.

3. Supply chain resilience and realignment: From an organisation’s point of view, resilience in 2026 is increasingly about nearshoring and multi-country sourcing. Companies are spreading production and supplier bases across regions to reduce concentration risk. They are also focussing on ensuring modal flexibility between ocean, air, and other transport options when disruptions hit. Besides, there’s a stronger push towards increasing digitisation, having tools that can improve end-to-end visibility and help teams foresee issues before they escalate. For instance, proactive risk mapping is emerging as a key strategy, allowing organisations to identify vulnerable suppliers, alternate routes, and exposure to climate events or geopolitical shocks and respond before operations are impacted. At the policy level, countries will be looking to sign favourable trade agreements to secure their markets amid uncertain times, especially when it comes to critical goods.  

India amid vulnerabilities

Despite a challenging global environment, India’s export story has held up reasonably well in 2025. Between April and November 2025, total exports have been more than $560 billion, growing by about 5.5% even amid tariffs and geopolitical uncertainties. 

This resilience has been supported by better market diversification and steady performance across key export sectors. Merchandise exports, in particular, rose to about $292 billion from $284 billion last year, driven by the strong performance of engineering goods, electronics, and pharmaceuticals. 

That said, the tougher effects of tariffs are expected to play out more fully in the year ahead. Considering this, resilience and not just growth will be a priority for India’s trade strategy. The upcoming budget presents a perfect platform to strengthen this approach. Last year, the government launched the export promotion mission with a total outlay of more than ₹25,000 crore. This was a meaningful step to improve trade finance, enhance competitiveness, and simplify trade processes for Indian exporters, especially MSMEs. Building on this, the government can introduce more trade-related reforms this year, specifically targeting tariff-related solutions. This will provide a much-needed cushion to sectors that are most vulnerable to U.S. tariffs, such as textiles, gems and jewellery, and marine products. Besides, India can expedite FTA negotiations with markets such as the U.S., the EU, and Mexico. This will help to diversify exports, enhance competitiveness, and attract more global investments.

The year ahead will once again test how global trade adapts to uncertain and volatile changes. While challenges exist, the global economy will keep evolving, rewarding businesses and countries that stay flexible, watchful, and more aligned to long-term shifts.

(The author is Partner and Head, India Global at KPMG in India. Views are personal.)