Global Trade Relations Under Threat: Unpredictable Changes Ahead
The world is facing a high risk of unpredictable and potentially significant changes in global trade policies, according to the 20th edition of the Global Risks Report by the World Economic Forum.
Geo-economic confrontation (sanctions, tariffs, investment control) ranks 3rd in terms of severity among current risks in 2025, as per the Global Risks Perception Survey (GRPS), but is expected to drop to 9th place over a two-year horizon. This follows a gradual escalation of tensions in global trade since 2017.
According to Global Trade Alert, the number of new harmful trade policies per year has increased worldwide, from 600 in 2017 to over 3,000 in each of 2022, 2023, and 2024.
The new US government, for instance, has suggested it will impose higher tariffs on imports from all its trading partners, particularly China, Mexico, and Canada. While these statements could have been an opportunity for a first move in future trade negotiations, they are undoubtedly a signal to the rest of the world that protectionism will be on the agenda.
US trading partners are considering retaliatory measures, along with a timeline for their implementation. Over the next two years, there is a high risk of seeing an escalation of tariffs and other protectionist trade measures globally, which could accelerate a broader disengagement between the US and China, as well as their respective allies. As the Cold War rhetoric between the two giants increases, fueling commercial tensions between their blocs, even countries not aligned with the West or East will be affected by these tensions.
In such a scenario of trade war, ongoing initiatives could easily stall or unravel. For example, the European Union's Carbon Border Adjustment Mechanism (CBAM) is more likely to face retaliatory measures from trading partners; and cooperation efforts in digital regulation will be confronted with strengthened negotiating positions. These initiatives require continuous collaboration to move forward.
The world is bracing for unpredictable changes in global trade policies, and the consequences could be far-reaching.
