by Lloyd's List
2 September 2025 (Lloyd's List) - GLOBAL trade is being reshaped — not only by tariffs or geopolitical tensions — but by a deeper, more persistent force: systemic policy unpredictability.
According to the latest Global Trade Update report from UN Trade and Development (Unctad), uncertainty is no longer a temporary disruption. It has become a structural feature of the global economy, raising costs, rattling financial markets and disproportionately impacting developing nations.
However, the burden of unpredictability is not shared equally, the report claims.
Import data shows that developing and least developed countries faced sharper swings in trade flows than advanced economies. While developed nations maintained relatively stable import patterns, shipments from developing countries fluctuated much more dramatically.
For LDCs, the impact was delayed but more severe, with volatility spiking in the second quarter of 2025. This lag highlights how vulnerable economies often absorb shocks later — and more intensely.
The report noted how in early 2025, volatility in US imports surged even before new tariffs were implemented. Companies scrambled to adjust, rerouting shipments, stockpiling goods and renegotiating contracts. This scramble emphasised how uncertainty itself can be more destabilising than the trade measures it precedes, the report explained.
“Once implemented, volatility subsided, suggesting that firms — while facing higher costs — had begun adapting to the new policy environment, Unctad said.
Unctad warned this climate of unpredictability is also eroding trust between trading partners.
As countries increasingly use trade policy to pursue domestic political, security and environmental goals, rule-based systems are weakening. Strategic ambiguity is becoming a common feature of policy making, leaving exporters uncertain about future market access, trade preferences and rules-of-origin frameworks.
To restore stability, the report outlines several practical steps.
These include providing advance notice of policy changes, basing decisions on transparent economic analysis, promoting international coordination and strengthening trade agreements.
Diversifying export markets is also key — companies and countries with broader trading relationships are better positioned to weather disruptions.
China’s recent trade performance offers a case in point. In the second quarter of 2025, Chinese exports to the world rose sharply even as shipments to the US declined.
“By maintaining alternative markets and established trading relationships, many Chinese firms have been able to cushion the impact of unpredictable US trade policies, stabilise export flows, and limit adverse effects on the country’s overall economy,” the report said.
As global interest rates remain high and fiscal pressures mount, Unctad concluded the cost of uncertainty is becoming too great to ignore.
“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,” said Unctad.
