The recent turbulence in global trade, led by the tariffs imposed by the US, threatens to upend the world's economy and could lead to a contraction in trade this year, while geopolitical uncertainty and trade imbalances pose additional threats.
These are the findings of new reports from the UN Trade and Development (UNCTAD) and the World Trade Organization (WTO), which have both warned of an increasingly challenging environment for firms around the world.
Both bodies observed this marks a major turnaround from previous predictions before the inauguration of US president Donald Trump, which had forecast continued expansion in global trade.
So what do the reports say, and what does this mean for organizations looking to navigate this uncertain situation?
WTO warns of trade contraction in 2025
The WTO's latest Global Trade Outlook, released in April, warned of a "sharp deterioration in the prospects for world trade" following a highly positive 2024, with uncertain trade policy and the impact of tariffs the biggest drivers of this.
Under current conditions, this is set to result in the volume of world merchandise trade declining by 0.2 percent in 2025 – almost three percentage points lower than it would have been without the recent policy shifts. North America will be particularly hard hit, with exports set to drop by 12.6 percent.
If the situation continues to deteriorate and more tariffs are imposed, global trade could decline even further, to -1.5 percent.
Director-general of the WTO Ngozi Okonjo-Iweala said: "The enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, the most vulnerable economies in particular."
UNCTAD: Balanced policies the key to ensuring growth
Separately, a recent report from UNCTAD - released before president Trump's 'liberation day' tariff announcement - warned that trade policies are redrawing the global map. This is leading to increased protectionism in advanced economies - which, in turn, is triggering retaliatory countermeasures from trading partners.
The study stated: "The challenge in 2025 is to prevent global fragmentation - where nations form isolated trade blocs - while managing policy shifts without undermining long-term growth. The actions taken now by governments and businesses will shape trade resilience for years to come."
It therefore urged countries to focus on balanced trade policies and encourage global cooperation.
The report also observed that 'nearshoring' and friendshoring', which were key trends in 2024, have reversed this year, while some economies, such as Australia and the EU, are seeking to reduce their reliance on traditional trading partners.
While this diversification may create new opportunities, it will also add complexity to global trade. As a result, businesses will need the right tools available to them to help navigate the market and understand the unique requirements of any new territories they operate in.
What does the US-China trade war mean for the world?
While many of the US' tariffs are at last temporarily on hold, the dispute with China remains intense, with Washington this week indicating import duties for Chinese goods could rise as high as 245 percent. The WTO noted this could see trade between the countries drop by as much as 80 percent, which Ms Okonjo-Iweala said would be “tantamount to a decoupling” of their economies.
In turn, this will lead to significant trade diversion, raising concerns among third markets about increased competition from China. At the same time, the US is likely to put additional pressure on countries that maintain close relationships with Beijing, which could lead to further tariffs or trade barriers.
All this reflects the importance to businesses of having a diverse, flexible approach to trade, as well as the need for solutions such as automation that ensure businesses can keep up with what is set to be a constantly-shifting environment in the coming months.