(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Jamie McGeever

ORLANDO, Florida, June 10 (Reuters) - In the long shadow of

tariffs, trade wars, real wars and an energy shock, global trade

isn't cooling. It's heating up. But how durable is this when

price, not volume, is mostly stoking the flames?

The latest trade data from some of the world's largest

economies, including the U.S. and China, show that cross-border

commerce is rising at a much faster clip than economists had

previously envisaged.

But in many cases, the increase in activity and surprisingly

strong headline export figures were driven primarily by higher

prices. These reflect the inflationary spike triggered by the

Iran war, especially in oil and other energy markets.

That was certainly true in the U.S., where exports hit a

record $327 billion in April, driven by shipments across a broad

range of goods.

Indeed, the goods deficit shrank to its smallest since 2020.

On the surface, that is welcome news for the U.S. economy, as

the shrinking deficit could be a net contributor to economic

growth in the second quarter.

But this may have been predominantly the result of elevated

prices, most notably for oil, fuel and other energy products.

This raises the question of how durable the improvement is.

To be sure, it's not just price doing the heavy lifting.

Physical export volumes from Canada are back to where they were

before the U.S. presidential election that returned Donald Trump

to the White House in November 2024, setting off trade tensions

between the neighboring nations. In fact, exports in April were

second only to February last year, when companies were

front-running Trump's looming tariffs, according to CIBC.

However, another factor that may be flattering headline

trade figures is base effects. Sluggish trade activity in the

first half of last year, as Trump's trade wars were kicking off,

is now the base for year-on-year comparisons.

All this suggests it is far too early to project any trade

renaissance.

CHIPS, CHIPS HOORAY

Price is also playing a key part in Asia's trade boom, but

soaring AI-related demand is also stoking the sizzling export

numbers.

China, the world's biggest exporter, clocked a 19.4% rise in

total exports in May. Sales of high-tech products accounted for

12 percentage points of that, according to Pantheon

Macroeconomics. But while the value of integrated circuit

exports more than doubled, export volumes rose only 2%, implying

that the headline number was inflated by price.

This is being replicated in other sectors, although

policymakers in Beijing and critics of China's mercantilism will

still focus on the headline dollar numbers, especially the big

one - China's total trade surplus, which is still more than $1

trillion on a rolling 12-month basis.

Taiwan's AI-driven export surge last month was even more

impressive. Exports in May rose more than forecast to the

second-highest level ever by value, jumping almost 52% from a

year earlier to $78.5 billion. Again, price was a major factor.

Taiwan is home to TSMC , the world's

largest maker of advanced chips used to power AI applications,

and a major supplier to Nvidia ( NVDA ), Apple ( AAPL ) and

other global tech giants. The price of chips, computer

equipment, software and other high-tech goods has surged over

the past year largely because physical demand for these products

has exploded.

That trend does not appear likely to reverse anytime soon

given the scale of AI-related investment underway globally: $7.6

trillion between 2026 and 2031, according to Goldman Sachs

Global Institute's latest estimates.

SURPRISING RESILIENCE

Overall, global trade is showing remarkable resilience that

few observers would have thought possible against the volatile

backdrop. It has been barely a year since Trump announced his

"Liberation Day" tariffs, sparking a worldwide trade war that

may have effectively ended decades of globalization.

Geopolitical rifts are also threatening trade flows, most

notably in the Middle East.

The AI frenzy can take much of the credit for keeping global

trade humming. Demand for these applications is accelerating,

much of the trade in AI-related products is cross-border, and

many of them have largely been exempt from tariffs.

But the question is whether this can continue. Could the

spike in AI compute costs eventually curb demand? Might major

powers increasingly seek to shorten AI supply chains to limit

national security risks?

For now, the AI boom looks unlikely to wilt, suggesting

trade activity may remain resilient, even against the backdrop

of tariffs, protectionism and deglobalization. As with many

other parts of the global economy, everything seems to depend on

how this tech story plays out.

(The opinions expressed here are those of Jamie McGeever, a

columnist for Reuters)

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