Global trade is being reshaped not only by tariffs and geopolitical tensions but also by a deeper, structural challenge: systemic policy unpredictability, according to the latest Global Trade Update from the United Nations Conference on Trade and Development (UNCTAD).
The report stresses that uncertainty is no longer a temporary disruption but a persistent feature of the global economy. This unpredictability is raising costs, unsettling financial markets, and placing a disproportionate burden on developing and least developed countries.
UNCTAD’s data reveals that advanced economies have largely maintained stable import flows, while developing nations have faced sharper fluctuations. For the least developed countries (LDCs), the impact has been delayed but more severe, with volatility peaking in the second quarter of 2025. The findings underline how vulnerable economies tend to absorb shocks later, yet with greater intensity.
The report also highlights how, in early 2025, volatility in U.S. imports rose even before new tariffs were implemented. Companies rushed to reroute shipments, stockpile goods, and renegotiate contracts, illustrating how uncertainty itself can destabilize markets more than the actual trade measures. Once tariffs were imposed, volatility eased as firms adapted, albeit at higher costs.
UNCTAD warned that such unpredictability is eroding trust among trading partners. As trade policies are increasingly shaped by domestic political, security, and environmental agendas, rule-based systems are weakening. Strategic ambiguity has become a feature of policymaking, leaving exporters uncertain about future market access, trade preferences, and rules-of-origin frameworks.
To restore stability, the report recommends steps such as advance notice of policy changes, reliance on transparent economic analysis, international coordination, and strengthening trade agreements. It also stresses the importance of diversifying export markets to better withstand disruptions.
China’s recent trade performance demonstrates this resilience. In the second quarter of 2025, Chinese exports rose globally despite a decline in shipments to the United States. By maintaining alternative markets, Chinese firms managed to stabilize flows and limit the adverse effects of U.S. trade unpredictability.
With high global interest rates and mounting fiscal pressures, UNCTAD concludes that the cost of uncertainty is becoming unsustainable. “Restoring stability and predictability is essential for businesses to invest, for countries to grow and for trade to fulfil its role as a driver of development,” the report said.
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