High U.S. tariffs have caused a $165 billion [1] deflection of trade away from the U.S.–China corridor.
This shift represents a fundamental restructuring of global commerce. As the primary trade route between the world's two largest economies weakens, businesses must navigate new logistics and supply chains to maintain stability.
Shubham Singhal, Chair of the McKinsey Global Institute, and MGI Partner Jeongmin Seong said these structural shifts occurred during a McKinsey Live event. They said that the current instability is the result of a massive trade shock that occurred in 2025 [2]. This shock was driven by the implementation of the highest U.S. tariffs in generations, a move that altered the geometry of global trade.
The disruptions have not subsided quickly. According to the MGI experts, the volatility and redirected trade flows have continued into 2026 [3]. The $165 billion [1] shift indicates that companies are actively bypassing the traditional U.S.–China route to avoid the cost of these tariffs.
This redirection of trade is not a temporary dip but a structural change. The shift forces a reconfiguration of where goods are produced, and how they are shipped globally. Leaders are now tasked with responding to these shifts by diversifying their sourcing and finding new trade partners to mitigate the risks associated with the U.S.–China corridor.
Because the 2025 shock [2] created such a significant pivot, the global economy is seeing the emergence of new trade hubs. These hubs are absorbing the volume previously handled by the U.S.–China route, though the transition has created ongoing friction in global logistics through 2026 [3].
“High U.S. tariffs have caused a $165 billion deflection of trade away from the U.S.–China corridor.”
The deflection of $165 billion in trade suggests that the U.S.–China economic relationship has entered a period of long-term decoupling. Rather than tariffs acting as a temporary lever for negotiation, the persistence of disruptions into 2026 indicates that corporations are permanently rewriting their supply chain maps to avoid geopolitical risk.
