By Yaroslav Lissovolik

The start of the year 2026 proved to be even more volatile in terms of international events than many pessimists would have foreseen. Against the backdrop of a further escalation in geopolitical risks, the global economic community is starting to exhibit close to frenetic activity in seeking to re-direct trade and investment flows towards those regions and sectors that are not as encumbered with rising tariffs. This process is leading many economies, including some of the advanced countries, to seek trade alliances in the Global South, where Mercosur, ASEAN, India are seen as the most sought after trade partners amid the fragmentation of trade ties across the developed world.

The scale of geopolitical shocks witnessed in 2025-2026 is indeed becoming transformative for the global trade system as higher levels of import tariffs are leading to a qualitative shift in the direction of trade flows and alliances. UNCTAD singles out a number of key trends in international trade for 2026, of which some of the most important from our point of view are the following:

– Tariffs on the rise: according to UNCTAD, while trade-weighted average applied tariffs are intact for natural resources at 0.8% in 2025 compared to 2024, for agriculture the increase was from 5.7% to 6.7%, while for manufacturing the rise was from 1.9% to 4.7%.

– Value chains continue to reconfigure as geopolitics transforms trade and investment itineraries: as noted in the report, “nearly two thirds of global trade takes place within value chains that are being reshaped by geopolitical tensions, industrial policy and new technologies”.

– Rising role of services in trade: exports of services continue to grow faster than goods; in developing economies the growth of exports in digitally-deliverable services from 2015 to 2024 amounted to 8.4% – higher than the 6.7% figure in the developed world.

– South–South trade surge: from 1995 to 2024 the share of developing countries in the merchandise exports of the Global South increased from 38.3% to 55.6%; of the main regions of the developing world, the most significant rise was observed in Africa – from 23.3% to 40.2%.

The latter trend of greater South-South trade in our view is likely to be the defining transformation of the global trading system in the coming years. Some of the remaining reserves in boosting South-South trade include regional integration (most notably in Africa) as well as inter-regional trade liberalization, including via such platforms as BRICS+. As noted by UNCTAD, at this juncture “interregional trade outside Asia, particularly between Africa and Latin America, remains significantly underdeveloped despite strong complementarities”.

In observing the trends towards greater South-South trade on the one hand and the pressures exerted by the US in the trade sphere on the other, developed economies from Europe and other parts of the globe are seeking pathways to securing access to growing markets in the developing world. This in turn was reflected in a flurry of visits by leaders of advanced economies to the large developing economies such as China and India, as well as in an expedited conclusion of trade talks on FTA agreements.

In particular, in January 2026, the EU declared in a span of several days that it clinched FTA accords with Mercosur as well as with India. After singning the deal with Mercosur and completing the trade talks with India, the EU is now exploring its trade options in Southeast Asia, where an FTA agreement Malaysia could be finalized in 2026-2027, with EU ambitions potentially then expanding to the negotiation of an FTA agreement covering all of ASEAN.

For his part, Canada’s Prime Minister Mark Carney has undertaken a visit to China in January 2026, with mutual trade being the key focus of his discussions with China’s leader Xi. According to Canada’s Globe and Mail, in 2026 Carney’s itinerary in boosting trade ties will include India (likely in February 2026), Brazil (likely April 2026), China (again, this time in November).

With North-North trade and investment ties under pressure and with advanced economies facing headwinds on the economic growth front, developing economies with high growth and sizeable post-liberalization preferential margins become attractive as potential counterparts in trade accords. This in turn can be exploited by fast-growing emerging markets via two tracks:

- pursuing South-South trade accords, thus raising the optionality of trade ties as well as the economic weight of the Global South economies in building North-South accords

- pursuing a strategy of “competitive liberalization” in North-South trade accords (vis-à-vis developed economies), thus seeking to extract the maximum benefit from the rising competition among developed economies to conclude agreements with the Global South

India in particular becomes one of the most coveted emerging markets with which developed and developing economies are striving to conclude preferential agreements. This is due to a combination of some of the highest growth rates in the global economy in the past several years (7.3% in 2025 according to the IMF) as well as the status of one of the largest economies in the world, with a strong potential for further expansion in the ranks of the “middle class”. Another factor is the relatively high level of trade barriers in India – this in effect raises the preferential margin that partner economies derive from concluding a preferential agreement with India.

In the end, the shift of the global economy towards greater South-South economic cooperation is not a foregone conclusion – there need to be pro-active steps undertaken by platforms such as BRICS+ to support this shift in the development of the world economy. As we have argued on numerous occasions, this can be attained via the formation of a common trade bloc within the WTO and the development of roadmaps for mutual trade liberalization, WTO reform and the new WTO global trade round. Mutual trade liberalization could be best addressed via a fast-tracked “integration of integrations” approach in line with the BEAMS concept elaborated back in 2018. Thus far, however, with the BRICS+ platform increasingly taking the lead in supporting fair and balanced trade, it does appear that it is becoming the focal point of a revitalized effort to relaunch the globalization process.

Yaroslav Lissovolik is a Founder of BRICS+ Analytics.