Global trade in flux: Navigating policy volatility and structural shifts

International trade is once again in the spotlight. A new Monthly Briefing from UN DESA examines the evolving dynamics, offering insights into both the risks and potential opportunities ahead.

Structural shifts in global trade

Global trade is undergoing profound changes, with globalization evolving along different dimensions. Services, rather than merchandise, are increasingly driving trade expansion, while policy uncertainty and shifting partnerships continue to reshape markets. Changes in sourcing patterns are reconfiguring global value chains, even as countries’ key trading partners are changing. 

Tariffs and trade: Lessons from the past

With tariffs in the headlines, experiences from the recent past offer some insight. Research shows that the 2018–2019 U.S.-China trade tensions raised costs for businesses and consumers, prompting supply chain adjustments. While some industries benefited from protectionist measures, others faced disruptions. 

These outcomes are consistent with economic theory, which also suggests that trade restrictions often redirect, rather than eliminate, trade imbalances. These restrictions can also contribute to inflation and reduce overall economic efficiency.

Who stands to gain?

Despite several downsides, shifting trade patterns could create new opportunities for some economies. As major markets rethink their supply chains, developing countries—particularly in East and South Asia, as well as parts of Africa and Latin America—may find openings in low- and mid-technology industries, such as apparel, footwear, and furniture manufacturing. 

Developing countries could also benefit from the rapid expansion of digitally deliverable services. Progress in artificial intelligence, for instance, promises to enhance accessibility, efficiency, and innovation in sectors such as education, healthcare, recreation, and financial services.

While uncertainty remains, history has shown that trade flows adapt to circumstances. For developing economies, strategic positioning and diversification could transform today’s disruptions into tomorrow’s growth opportunities.

More information is available from the March Monthly Briefing on the World Economic Situation and Prospects.

Photo credit: UN Photo/Kongchai Athithane