World Trade Through History
World trade grew from roughly 1% of global GDP in 1820 to 14% in 1913 — the 'first wave of globalization'. It collapsed in the inter-war period, falling back to 5% by 1945. The second wave, accelerated by GATT and container shipping, drove trade past 30% of GDP in 2008. It has since plateaued, with the world entering a 'slowbalization' phase.
Key insights
First wave: steam, telegraph, gold standard
Between 1870 and 1913, trade as % of GDP roughly tripled. Steamships cut Atlantic crossing times from 40 days to 7. The transatlantic telegraph enabled price arbitrage. The gold standard reduced exchange-rate risk. Migration, capital flows and trade all peaked together — and all collapsed together in 1914.
Second wave: GATT, containers, China's entry
Post-1945, the GATT/WTO trading rounds cut average industrial tariffs from 22% to under 5%. The shipping container (1956) cut handling costs ~95%. China's accession to the WTO in 2001 added 1.3 billion people to the world labour-supply at a stroke. By 2008 trade was over 30% of GDP — twice the 1913 peak in proportional terms.
Are we in a third wave or a retrenchment?
Trade-to-GDP has been roughly flat since 2008. The 2018+ US-China tariff escalation, supply-chain reshoring, and conflict-driven disruptions have all pressed in the same direction. Services trade, digital trade and intra-firm transfers continue to grow faster than goods trade — so the headline ratio understates the deeper integration that has continued.
World trade as % of global GDP 1820–2024
Sum of world exports and imports / global GDP, current prices
Show data table
| Trade % of GDP | |
|---|---|
| 1820 | 2 |
| 1870 | 9 |
| 1900 | 12 |
| 1913 | 14 |
| 1929 | 16 |
| 1945 | 5 |
| 1960 | 11 |
| 1980 | 18 |
| 2000 | 25 |
| 2008 | 30 |
| 2020 | 25 |
| 2024 | 28 |
Key Finding: Two clear waves separated by the inter-war collapse; the current plateau is the third inflection.
Average tariffs — major economies (1850–2024)
Average tariff on imports of manufactures, %
Show data table
| USA | UK / EU | |
|---|---|---|
| 1850 | 14 | 5 |
| 1875 | 30 | 3 |
| 1900 | 27 | 0 |
| 1913 | 25 | 0 |
| 1925 | 38 | 17 |
| 1932 | 49 | 17 |
| 1950 | 15 | 15 |
| 1970 | 7 | 8 |
| 1990 | 5 | 5 |
| 2010 | 2 | 2 |
| 2024 | 9 | 5 |
Key Finding: Tariffs were extremely high in the inter-war period; the post-WW2 fall is the underlying enabler of the second globalization wave.
Methodology & caveats
Trade-to-GDP as a globalization metric
Trade-to-GDP is the most common headline measure but has known biases — it rises mechanically as supply chains lengthen (each component crossing borders is counted) and overstates 'real' integration. Value-added trade statistics (TiVA, WIOD) strip out double-counting and show globalization continuing past 2008.
First-globalization sources
Federico and Tena (2019) reconstructed world merchandise trade from 1800 onwards using national archives, port records and customs receipts. Pre-1870 figures are estimates; the picture from 1870 onwards is reasonably firm. Services trade is excluded from the historical series — modern figures include services.
What 'globalization' means here
Trade-to-GDP captures merchandise integration. Capital flows, migration and information flows are separate dimensions that broadly co-move but not perfectly. Each was strong in 1913, collapsed in 1914–45, and recovered to varying degrees post-1945. Current migration share of world population is below the 1913 peak.