Global trade no longer plays by old rules

Co-authored by Matthew Parker-Jones, Managing Director and Global Head, GTB Product Management and Dyanne Carenza, Managing Director, Global Trade & Working Capital Solutions

As geopolitical risk climbs and logistics costs compound, companies are shifting their strategies—from global sprawl to regional strength. The goal? Resilience, proximity, and optionality. And one of the most dynamic, underbuilt trade corridors gaining momentum is the triangle connecting Europe, Latin America, and North America.

At Scotiabank, we see this shift every day in the questions our clients are asking:

• “How do I optimize liquidity across new LATAM subsidiaries?”
• “How do I simplify trade flows now that we’re sourcing from both Mexico and Europe?”
• “How can I finance shipments faster without adding manual complexity?”

Clients are also increasingly concerned with the ever-changing tariff policies and are seeking ways to protect their assets by changing suppliers, engaging in proactive trade negotiations with governments, and more. It’s not the first time our clients have faced upending trade realignments, as similar shifts were observed during the COVID-19 pandemic, and historically, trade routes have always evolved in response to global events. Recent bilateral trade agreements, such as CETA (the Comprehensive Economic and Trade Agreement), EU-Mercosur, and EU-Mexico, have helped reaffirm the strategic importance of agreement and trust between the three regions.

But as more questions emerge and adjustments unfold, one broader shift is becoming apparent. Whether you’re a multinational with a restructured supply chain, or a financial institution (FI) facilitating those flows, the corridor model is quickly replacing the global one. And this EU–LATAM–North America lane is emerging as a powerhouse.

The corridor opportunity isn’t theoretical, it’s already taking shape. By 2035, as much as $3 trillion in global trade is expected to reroute toward regional corridors¹, and the EU–LATAM–North America triangle is uniquely positioned to benefit.

This realignment is being driven by a convergence of forces. On the regulatory front, new trade agreements are lowering barriers and opening markets, like the recently finalized EU–Mexico Global Agreement and the politically concluded EU–Mercosur deal²,⁵. At the same time, Europe is investing heavily in digital infrastructure and connectivity through programs like the EU–LAC Digital Alliance, designed to improve data security, payment rails, and cyber resilience between the regions⁶.

Meanwhile, global shipping disruptions, including drought‑linked congestion in the Panama Canal and Red Sea blockages, are prompting companies to diversify routes and de‑risk supply chains³. Together, these signals point to a reshaping of trade at the corridor level, not as an exception, but as the new normal.

While the term “corridor” feels new, the trade link between Europe and the Americas is centuries in the making. What’s changed is the alignment of modern enablers—from bilateral trade agreements to nearshoring incentives—that are breathing new life into these long-standing routes. Agreements like CETA, between Canada and the EU, and the updated EU–Mexico accord, are gaining traction as companies seek friend-shored partners and regional stability. These frameworks are no longer viewed as optional—they’re increasingly strategic.

Europe is already Latin America’s third largest trading partner⁷, but the character of that relationship is changing. It’s no longer just about export flows or commodity exchange, it’s about multidirectional growth, supported by better infrastructure, smarter trade policy, and regionally aligned business models. Succeeding in today’s trade environment means having the right tools, advice and connections to keep things moving and spot new opportunities as they come along.

Over the past year, we’ve seen tangible shifts in how corporates are operating across this corridor:

• European manufacturers are relocating final assembly to Mexico to gain tariff free access to the U.S. and streamline North American distribution.
• Latin American exporters are targeting European markets that offer faster settlement cycles and more stable FX conditions. Regional treasury teams are reevaluating capital structure and intercompany lending to better support these new trade routes.

Another example of what this looks like in practice is the EU’s Global Gateway initiative, which committed €45 billion to Latin America and the Caribbean, including solar and wind energy projects in Brazil and lithium extraction partnerships to support Europe’s green transition⁸.

What used to be viewed as secondary or adjacent markets are now emerging as critical nodes in a broader corridor strategy, demanding new levels of financial coordination and foresight. Transparency is key amidst the fact that our trade world remains highly interconnected and interdependent on one another. This necessitates more efficient, collaborative, and transparent ways to manage flows through trusted networks.

These trusted networks include banks supporting buyers and sellers, as well as partnerships between FIs and FinTechs to enable end-to-end transactions.

By working together, corporates can build supply chains that are stronger, more secure, and easier to manage.

Corridor strategies are unlocking growth but introducing real complexity for treasury and finance teams. We’re hearing consistent themes:

• Managing FX exposure across LATAM while funding operations in Europe
• Gaining visibility into cash positions across subsidiaries
• Rethinking capital structure, accounting for risk and resiliency as trade lanes shift

The same lessons apply to medium and small businesses who are facing challenges to break into new markets and secure short-term capital all while safeguarding existing capital needed to fulfil orders. Scotiabank, with boots on the ground in Europe and LATAM, offers adaptable lending facilities and risk mitigation solutions for FX and payments.

These aren’t back-office concerns, they’re strategic decisions. And they’re moving fast.

At the same time, financial institutions are evolving to meet this new paradigm. Across the industry, FIs are being challenged to:

• Deliver real-time transparency across borders
• Accelerate trade finance and liquidity workflows
• Integrate seamlessly with treasury systems

One of the main challenges in this corridor is aligning the complex, multi-currency, multi-jurisdictional landscape of Latin America with the more unified, single-currency market of the European Union. Our solutions continue to evolve to meet this complexity not only from a technological and digital perspective, but also through a multi-regional lens.

From the ScotiaConnect^® client portal to the deployment of a multi-regional supply chain financing platform, we're enabling clients to operate more seamlessly across diverse markets.

Banks that succeed in the corridor economy won’t just provide capital. They’ll reduce friction, digitize connections, and help clients adapt in motion. That is a goal we have continuously strived for here at Scotiabank. By supporting significant trade and capital flows globally, we bring together market insights, bespoke advice, and strategic solutions to help clients build trust, resilience, and future-ready supply chains built to withstand the test of time.

We’re unpacking these corridor dynamics live at Sibos 2025 in Frankfurt:

Session: Trade Without Borders – Reimagining Europe–LATAM–North America Trade Corridors

Wednesday, October 1 | 12:45–1:15 PM | Exhibitor Stage 1

As corridor strategies replace global chains, the institutions that succeed will be those that anticipate complexity, and solve for it. At Scotiabank, we help corporates and financial institutions thrive in motion. Let’s connect at Sibos, or start a conversation by contacting us.

^{This article is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third-party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly, and action is taken based on the latest available information.}