The imposition of tariffs by the United States will affect global trade in 2025

He Global trade will reach a record of $33 trillion in 2024showing great resilience to the economic and geopolitical challenges that currently persist; However, there are concerns for 2025, when an escalation of trade wars, geopolitical tensions and policy changes is expected, the UN Conference on Trade and Development noted this Thursday (UNCTAD).

In your World Trade Update, UNCTAD explains that this year’s commercial activity represents an increase of one trillion dollars compared to 2023driven by annual economic growth of 3.3%.

UNCTAD attributes the progress, above all, to trade in services, which increased by 7% -half of the total expansion-, adding 500,000 million dollars to the value of world trade.

He trade in goods, for its part, grew by almost 2%, remaining at a level below its 2022 maximum.

Protectionism and uncertainty

UNCTAD warned that for 2025 the prospects are uncertainmainly due to the protectionist changes in US trade policy, announced by the government that will begin on January 20.

He policy shift would imply tariffs not only on specific products, but with a broad scopewhich could affect “not only geopolitical adversaries but also key trading partners, particularly those with higher tariffs and significant trade surpluses with the United States,” he noted.

UNCTAD added that new taxes would disrupt global value chains.

“Even modest changes to US tariffs will have substantial effects on the dynamics of world tradegiven the role of the United States as an important consumer market and the interconnection of cross-border value chains.”

Retaliation and domino effect

Such measures could trigger retaliation and domino effects, impacting industries and economies along supply chains whole, he warned.

“Even the mere threat of tariffs creates unpredictability and weakens trade, investment and growth economic,” the agency warned.

The most exposed countries

According to UNCTAD, the countries most exposed to changes in US trade policy are those with large trade surpluses with the country and higher tariff barriers.

The 2023 figures on trade in goods reveal that the most affected economies would be China, whose trade surplus amounts to 280 billion dollars; Indiawith 45,000 million dollars; the European Unionwith 205,000 million dollars; and Vietnamwith 105,000 million dollars.

Other countries exposed to risk, even though they impose relatively lower tariffs on US imports or have trade agreements with that nation, they are Mexico, with a surplus of 150,000 million dollars; Canadawith 70,000 million dollars; Japan, with 70 billion dollars; and Korea, with 50 billion dollars.

The dollar

UNCTAD projects an appreciation of the US dollar in light of geopolitical tensions and changes in US policy; However, it highlights that possible interest rate cuts in 2025 could weaken the currency.

Since most commodities and international transactions are quoted in dollars, Its value is crucial for global tradeso the variables that will determine its behavior generate uncertainty in the outlook.

Developed economies lead growth

In its analysis of this year’s results, UNCTAD details that developed economies led growth in the third quarter thanks to stable demand and favorable commercial conditions.

In contrast, developing economies, which traditionally serve as engines of global trade, faced a contraction in imports and a decline in South-South trade. Additionally, energy trade decreased 2% in the third quarter and 7% for the year.

Trade in metals also contracted (3%), while automotive sector recorded a drop of 3% in the third quarter, despite an estimated annual growth of 4%.

The information and communications technology and fashion sectors recorded strong growth, increasing 13% and 14% respectively during the third quarter.

Japan, the fastest growing trade

Nationally, Japan led growth with an increase in 5% in exports of goods and an annual increase of 13% in exports of services. The United States also recorded a 4% increase in merchandise imports in both quarterly and annual terms.

By region, UNCTAD reported that the European Union maintained growth in marketed services, with positive projections for the year.

Meanwhile, developing economies struggled, and China recorded a drop in exports of 2% in the third quarter, although exports from its services sector rose 9% over the year.

India also faced quarterly declines in goods trade, but marked modest annual gains, while trade in East Asia largely stagnated, with imports flat and a marginal 1% growth in exports.