Global trade policy activity continues to intensify: Supply chain restructuring signals revealed by the WTO-IMF index

Global Trade Policy Enters a Period of High-Intensity Activity

Mid-2026 research data provides observers of the global trading system with a clear and sober reference point: international trade policy activity has not returned to calm in the post-pandemic adjustment, but instead has continued to climb over the past year, reaching its highest level since the global financial crisis in early 2026.

This Trade Policy Activity Index (TPA Index), jointly updated by economists from the World Trade Organization (WTO) and the International Monetary Fund (IMF), uses a dynamic factor model to extract common dynamics from a vast number of trade policy measures worldwide, capturing the evolution of global trade policy at a monthly frequency since 2008. Unlike traditional trade policy uncertainty indices, the TPA Index directly tracks the policy changes that governments actually implement, offering a more empirically grounded perspective on the forces shaping global supply chains.

A New Peak Driven by Restrictive Measures

According to the index, the level of global trade policy activity from January to May 2026 was nearly twice the 2024 average and about a quarter higher than the 2025 average. This increase is not driven by a single event but reflects a sustained upward momentum.

More noteworthy is the significant divergence in policy composition. The index decomposition shows that the recent rise in activity is driven mainly by strictly restrictive measures—including tariff increases, import bans, and quantitative restrictions. Such measures climbed faster than all other categories between 2025 and 2026. At the same time, "other measures" represented by subsidies have also grown steadily, indicating that governments are increasingly using trade policy to achieve industrial policy or security objectives.

In contrast, facilitation measures aimed at lowering barriers and simplifying customs procedures have seen a marked slowdown in growth. This scissors gap—restrictive policies accelerating while facilitation policies lag—was first captured by the index in 2025 and continued to widen in 2026. Although facilitation measures once accounted for more than two-thirds of all measures during the Strait of Hormuz crisis, this temporary exception did not reverse the long-term trend.

From Great-Power Rivalry to Global Participation

A key observation is that this rise in trade policy activity is not limited to large economies such as the United States and China. Although G20 economies tend to show the most pronounced peaks, policy activity in non-G20 economies has also increased significantly in recent times. This suggests that the instrumentalization of trade policy is becoming a global phenomenon—from Southeast Asia to Africa, from Latin America to the Middle East, governments are more actively adjusting tariffs, subsidies, and export-import controls.

This broad participation has changed the traditional geopolitical trade narrative. In the past, people tended to view trade tensions as a game among great powers; today, small and medium-sized economies are also joining the wave of policy adjustments, whether actively or passively. This reflects a deep-seated change: every node of the global supply chain can become a contact point for policy intervention.## Policy Transmission in the Age of Supply Chains

The increasing frequency and restrictive orientation of trade policy activities are shifting their impact on global supply chains from "event-driven shocks" to "structural pressure." In the past, tariff hikes or trade bans were typically episodic, and firms could respond through inventory adjustments or route replanning. But when policy activity remains persistently high and predominantly restrictive, the long-term logic of supply chain configuration is forced to be rewritten.

Manufacturing relocation is no longer based solely on labor costs or market size; it increasingly factors in the stability of the policy environment. When selecting production bases, firms must assess the trade restrictions, subsidy policies, and associated compliance costs that a country may introduce in the future. This consideration is making "policy resilience" of supply chains a decision variable as important as cost efficiency.

At the same time, the proliferation of subsidy measures is reshaping the competitive landscape. Governments support domestic industries through subsidies, challenging the fairness of global trade. According to the WTO's trade monitoring database, the share of subsidy-type measures among non-facilitating measures has continued to rise, potentially leading to a vicious cycle of overcapacity and trade frictions.

New Tensions Between Regionalization and Globalization

The elevated level of the TPA index does not directly equate to deglobalization. More precisely, it reflects that globalization is entering a stage of "intensive management"—countries are attempting to preserve trade benefits while using policy tools to reduce external dependence. This trend coexists with the deepening of regional trade agreements: regional frameworks such as RCEP and CPTPP continue to advance, yet policy activity among members within these regions is also increasing.

This seemingly contradictory phenomenon actually reveals a deep transformation of the global trading system: the unified global market is being replaced by a multi-layered patchwork of rules. Firms no longer face a single most-favored-nation tariff rate; instead, they must navigate a complex set of institutional arrangements, including rules of origin, bilateral tariff quotas, and export controls. The high frequency of trade policy activity is a direct manifestation of this institutional fragmentation.

Outlook: Policy Activity Will Remain Elevated

The TPA index's exploratory nowcast, which combines monthly commodity price and uncertainty indicators with weekly text data from Google Trends, provides a forward-looking projection through June 2026. Although there was a slight slowdown early in the year, the overall signal still points to further increases. This means that global supply chain managers need to prepare for sustained policy volatility.

For international trade researchers, the TPA index offers a tool for real-time monitoring of the policy pulse. It reminds us that trade policy is no longer an occasional source of external shocks, but rather a core variable endogenous to the functioning of the global economy. In such an era, understanding the direction of trade policy is just as important as understanding shipping prices or commodity price fluctuations.The future of global supply chains will largely depend on whether countries can find a new balance between restrictive measures and facilitation measures. The brief exception during the Hormuz crisis shows that when faced with common challenges, countries may still choose to lower barriers. But in terms of the overall trend, the 2025-2026 index has undoubtedly sent a more worrying signal: the world is evolving toward more frequent and more fragmented policy interventions.

For businesses and policymakers, this is both a challenge and an opportunity to re-examine global layouts. Those who can integrate policy risk into their core strategies will seize the initiative in the new round of globalization restructuring.