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Global Trade Faces Uncertain Outlook Amid Policy Risks and Geopolitical Tensions

Strategic Insights

— 1 min read

Global trade expanded by an estimated $300 billion in the first half of 2025, despite a slower pace of growth, according to the latest Global Trade Update released by UNCTAD. However, signs of slowing global growth, persistent policy uncertainty, and geopolitical tensions pose risks for trade in the second half of the year. Global trade rose by about 1.5% in the first quarter, with growth expected to accelerate to 2% in the second quarter. Trade in services remained the main engine of annual growth, rising 9% over the last four quarters.

Key Takeaways:

  • Global trade expanded by an estimated $300 billion in the first half of 2025, despite a slower pace of growth.
  • Developed economies outpaced developing countries in the first quarter of 2025, reversing recent trends that had favored the Global South.
  • Trade imbalances deepened during the last four quarters, with the US posting a larger deficit and China and the European Union recording growing surpluses.
  • Bilateral gaps also widened between the US and key partners, including China ($360 billion annual deficit), the EU ($276 billion), and Viet Nam ($116 billion).
  • The global trade faces mounting headwinds in the second half of 2025, amid persistent policy uncertainty, geopolitical tensions, and signs of slowing global growth.
  • New US tariffs have raised the risk of trade fragmentation, and retaliatory measures have so far been limited, but a further wave of unilateral actions could trigger escalation.
  • Domestic subsidies and inward-looking industrial policies are expected to intensify, particularly in strategic and high-tech sectors, which could disrupt deeply integrated production networks.

Statistics:

  • Global trade rose by about 1.5% in the first quarter of 2025.
  • Trade in services rose 9% over the last four quarters.
  • Developed economies regained the lead in trade growth, reversing recent trends that favored the Global South.
  • South-South trade stagnated overall, but Africa bucked the trend with exports up 5% and intraregional trade growing 16% year on year.
  • Global trade expanded by $300 billion in the first half of 2025.
  • Bilateral gaps widened between the US and key partners:

+ China: $360 billion annual deficit

+ EU: $276 billion

+ Viet Nam: $116 billion

Sources:

  • UNCTAD. (8 July). Global Trade Update.
  • UNCTAD. (2025). Global Trade Update.

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