Geneva, Switzerland – As major economies prepare to roll out sweeping new tariffs, the global trade system is teetering on the edge of a critical phase, warns UN Trade and Development (UNCTAD). The escalating disputes threaten to derail growth, investment, and development progress, with the heaviest toll falling on the world’s poorest and most vulnerable economies.
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“This hurts the vulnerable and the poor,” said UNCTAD Secretary-General Rebeca Grynspan. “Trade must not become another source of instability. It should serve development and global growth.”
The rising tensions, marked by tit-for-tat measures and stalled negotiations, are driving up the cost of essentials like food and medicine, hitting low-income communities hardest. For businesses and policymakers, the unpredictability in trade and investment has become a serious barrier to planning and growth.
Vulnerable Countries Bear the Brunt
While just 10 of the nearly 200 U.S. trade partners account for almost 90% of its trade deficit, the fallout is disproportionately affecting smaller players. Least developed countries and small island developing states—responsible for a mere 1.6% and 0.4% of the deficit, respectively—are seeing their economies squeezed. These nations, UNCTAD notes, will neither resolve the trade imbalance nor generate significant revenue from the tariffs, yet they face severe consequences.
In many low-income economies, a “perfect storm” is brewing: worsening external conditions, unsustainable debt, and slowing domestic growth. Disrupted imports are straining fragile healthcare systems, while small-scale farmers struggle with shrinking export markets.
A Call for Dialogue Over Escalation
UNCTAD acknowledges the need for trade reform to address imbalances, concentrated gains, and outdated rules. However, the agency insists that solutions must emerge through dialogue, not escalation. “This is a time for cooperation,” Grynspan emphasized. “Global trade rules must evolve to reflect today’s challenges, but they must do so with predictability and development at their core, protecting the most vulnerable.”
The agency has issued an urgent plea to decision-makers: reconsider tariffs that disproportionately harm vulnerable countries. Without swift action, these measures could inflict profound suffering on millions, exacerbating inequality and instability.
As trade talks remain deadlocked, advocates warn that the focus on geopolitical victories risks overshadowing the human cost. For the world’s poorest, the stakes could not be higher.
The Impact of Trade Imbalances on the U.S. Economy
American trade policy contributed to a $1.2 trillion trade imbalance in the U.S. last year—an economic gap that some experts argue must be addressed to safeguard the nation’s long-term economic stability.
However, many economists point out that the trade deficits targeted by former President Trump stem from more complex factors than just foreign tariffs or protectionist policies. They argue that relying solely on trade deficits to justify tariffs overlooks key drivers like strong U.S. consumer demand for imported goods.
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