Trésor-Info - Publications de la direction générale du Trésor - Value-chains

Geopolitical Fragmentation of Trade

2025-11-06T00:00:00+01:00

At a time of heightened geopolitical tensions, economic exchanges between nations are increasingly governed by a bloc-based approach. We are witnessing a reorganisation of trade between groups of geopolitically aligned countries, i.e. a geopolitical fragmentation of trade.

According to our estimates covering a period preceding the second Trump administration, the fragmentation between blocs of military allies is more marked than between diplomatically aligned countries or countries maintaining close economic cooperation. This fragmentation began with the annexation of Crimea in 2014 and accelerated with Russia’s invasion of Ukraine in 2022.

Since 2010, the military allies of the United States have increased their imports from other US-allied countries by around 40%, while imports from Russia’s military allies have decreased by 80% compared with trade between or with countries not belonging to either of these blocs (see Chart opposite).

Fragmentation can stem from strategies that address legitimate concerns, such as reducing unwanted dependencies. However, trade fragmentation would be less economically efficient than the free allocation of resources.

Similarly, reduced trade diversification could undermine the resilience of our economies. Lastly, fragmentation could hamper our ability to tackle global challenges such as the green transition and development.

Minerals in the Energy Transition

2024-10-24T00:00:00+02:00

The energy transition is expected to involve use of mineral-intensive technologies, with high demand for certain so-called “critical” or “strategic” minerals such as lithium, graphite, nickel, manganese, silicon, rare-earth elements and copper.

In the short term, the global supply of critical minerals appears to be sufficient to meet the new uses related to the energy transition. Lithium and nickel prices have been falling since early 2023 against the backdrop of a sharp uptick in Chinese production and slowdown in global demand. Production nevertheless remains highly geographically concentrated, with a handful of countries holding a monopoly over the extraction of key critical minerals, and China now dominating refining and processing for the majority of these minerals.

Global demand could more than triple between now and 2050 in order to meet international and domestic environmental targets (see Chart below), with this spike in demand far exceeding current production levels for lithium, graphite and cobalt. Although many mineral-producing countries are eager to capitalise on their resources, the possibility of shortages cannot be ruled out – not least because the current low-price environment is weighing on the anticipated profitability of investments and new production sites, potentially leading to projects being postponed.

Many governments have responded to these risks, and to mounting geopolitical tensions, by introducing policies to secure and diversify supplies of critical minerals. At the same time, recent years have seen a sharp increase in trade barriers affecting these minerals, largely as a result of positioning strategies further down the value chain.

Analysis of The Vulnerability of French Imports

2021-12-15T00:00:00+01:00

The Working Paper series presents work carried out within DG Treasury, disseminated with the aim of enlightening and stimulating public debate. The authors are solely responsible for their work.

This working paper introduces a new methodology for assessing the vulnerability of French supplies at the most detailed level of products, and applies it to metal products, that are critical inputs for industries. It builds on previous statistical work on the identification of vulnerable imported products carried out by the French Treasury (Tresor-Economics No. 274). The identification of vulnerable metal products is based on a combination of three criteria: (i) a large share of French imports from outside the EU, (ii) a concentration of imports from a limited number of supplier countries outside the EU and (iii) insufficient production at the EU level. This study is one of the first to use the characteristics of firms importing vulnerable products in order to (i) measure the exposure of the different sectors to these products and (ii) characterize the resilience of firms to a shortage of these vulnerable products according to criteria such as the storage behaviour of these firms.