UN Economist Warns of 3% Drop in Global Trade Due to US Tariffs

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United Nations: Global trade could contract by three percent following the United States’ latest tariff measures, which may ultimately reshape international supply chains and foster untapped regional trade ties, a senior UN economist warned on Friday.

“There will be shifting in supply chains, a reassessment of global alliances, and both geopolitical and economic shifts,” said Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC), during a press briefing in Geneva.

The warning comes after the White House announced a 90-day pause on “reciprocal tariffs” for most countries, excluding China. While this pause reduces import duties to a still substantial 10 percent for many countries, tariffs on Chinese imports remain at a staggering 145 percent. In response, China has imposed tariffs of up to 125 percent on US exports.

Coke-Hamilton noted that earlier shifts in US trade policy had already severely impacted countries like Mexico, China, Thailand, and several African nations—including the US itself.

“Mexico’s exports have begun moving away from traditional markets like the US, China, and Europe, making modest gains in Canada, Brazil, and, to a lesser extent, India,” she said. Vietnam, she added, has also redirected its exports away from the US, Mexico, and China, seeing increased trade with the EU, South Korea, and others.

However, she cautioned that developing nations are often ill-equipped to adapt quickly to such disruptions due to limited manufacturing diversity and value-added production capabilities. Countries most vulnerable to US tariff shifts include Lesotho, Cambodia, Lao PDR, Madagascar, and Myanmar.

Citing World Trade Organization (WTO) projections, Coke-Hamilton said bilateral trade between China and the US could fall by as much as 80 percent if the current trade tensions persist. Nevertheless, she emphasized that this trade accounts for only 3–4 percent of global commerce, leaving 96 percent of global trade still active.

Despite that, the uncertainty surrounding the ongoing extensions of the 90-day pause continues to undermine global market confidence. “The lack of stability and predictability affects trade and the decisions firms are making in real time,” she said.

Reflecting on past economic disruptions, Coke-Hamilton concluded: “This is not the first time the world economy has experienced tremors over the last 50 years. But this one feels a little more harsh, a little more tremulous.”