New Cold War? What New Cold War? Confronting the Geoeconomic Fragmentation Narrative with the Data
It has become widely accepted that the world economy should be seen as increasingly shaped by forces of fragmentation, resulting from geopolitical tensions. This article takes another look at this narrative, using international trade data. While an aggregate analysis is consistent with a new Cold War narrative, whereby international trade is increasingly seen as split into two blocs, this is only a mix of very different outcomes. Far from being a widespread trend, geoeconomic fragmentation of trade flows is only significant in “hotspots”: Russia's foreign trade and China-US bilateral exchanges, and the impact is massive in these cases. Outside these “hotspots”, there is no tangible sign that geopolitical tensions have been shaping international trade patterns in terms of blocs, nor is there any hint of a trend toward nearshoring – to the contrary, in fact.
The economic consequences of geopolitical tensions are obvious. Coming after the Sino-American tariff war initiated by the Trump administration, the economic sanctions ensuing from Russia's war on Ukraine seemed to warrant a clear conclusion: Geopolitical tensions have fragmented the world economy. Given the overarching rivalry between the United States and China, it is even tempting to make a parallel with the Cold War era and ask to what extent these trends might be seen as the premise of a division of the world economy in two rival blocks. The political communication about “friend-shoring”, popularized by the Biden administration, can only reinforce such concerns, and a growing body of literature has fed them, including influential works by the International Monetary Fund (IMF).This narrative matters, because it conditions to a large…
> Read the rest of Sébastien Jean's article on AEFR's website.
Article published in the "Revue d'économie financiére" (n°160), Geopolitical Shifts, Economic and Financial Fragmentation: Volume 1 — The Era of Disruption (December 2025).
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Sébastien JEAN
Associate Director of Ifri's Geoeconomics and Geofinance initiative
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