As major economies prepare to implement sweeping new tariffs, the United Nations Conference on Trade and Development (UNCTAD) has warned about the escalating challenges facing the global trade system. These measures threaten to undermine growth, investment, and development—especially in the most vulnerable economies.
“This hurts the vulnerable and the poor,” stated UNCTAD Secretary-General Rebeca Grynspan. “Trade must not become another source of instability. It should serve as a driver for development and global growth.”
The increasing unpredictability and uncertainty surrounding trade and investment are posing serious obstacles to businesses and policymakers alike, inhibiting strategic planning and growth potential.
The Hardest Hit: Vulnerable Economies
Of nearly 200 U.S. trade partners, just 10 account for almost 90% of its trade deficit. Yet, least developed countries (LDCs) and small island developing states (SIDS)—responsible for only 1.6% and 0.4% of the deficit, respectively—are being disproportionately affected. These economies are neither significant contributors to the deficit nor viable sources of substantial revenue, yet they bear the brunt of the impact.
Many low-income countries now face a “perfect storm” of deteriorating external conditions, unsustainable debt burdens, and slowing domestic growth. This confluence of factors risks jeopardizing their development progress and deepening economic vulnerabilities.
A Call for Dialogue Over Conflict
While trade reform is undeniably necessary, UNCTAD emphasizes that solutions must be rooted in dialogue and negotiation rather than escalation. Trade imbalances, concentrated economic gains, and outdated regulatory frameworks need to be addressed—without unfairly penalizing those who bear little responsibility.
“This is a time for cooperation, not escalation,” Grynspan urged. “Global trade rules must evolve to address today’s challenges, prioritizing predictability and development while safeguarding the most vulnerable.”
UNCTAD calls on policymakers to urgently reconsider the imposition of tariffs on vulnerable nations, warning that these measures could inflict severe economic and social pain on millions of people
