In fact, commodity prices are the key to understanding trade trends over the last few decades. When they were high, they drove increased trade – to the point that the share of trade to GDP rose – fueling hype about the inevitable progress of globalization. But in 2012, commodity prices began to fall, soon bringing trade down with them.
Clearly, there is a direct link between the trends in trade and commodity prices (see figure). Given that this connection affects all manufactured goods that require raw material inputs, it should be no surprise that, as commodity prices have declined, so has global trade.