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 2330.TW, TSM.N, the world's largest maker of advanced chips used to power AI applications, and a major supplier to Nvidia NVDA.O, Apple AAPL.O 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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