Global trade faces unprecedented levels of policy uncertainty, with governments making greater use of strategic ambiguity in negotiations. The escalation stems from intensifying competition over critical raw materials and persistent trade imbalances, compounded by the weakening of multilateral safeguards that previously discouraged sudden policy shifts, UN Trade and Development (UNCTAD) has warned. This volatile environment particularly penalises smaller firms and developing economies lacking resources to adapt quickly, it had indicated.
- Multilateral and regional agreements had historically acted as stabilisers, discouraging abrupt shifts and providing market predictability for decades.
- Surges in uncertainty were typically episodic, linked to specific events such as regional conflicts and the COVID-19 pandemic.
- However, economic and non-economic factors now drive rounds of supportive and corrective trade measures across major economies.
- Trade policy increasingly pursues domestic political, security, and environmental goals unilaterally, prompting responses from trading partners.
- UNCTAD published this analysis in its September 2025 Global Trade Update examining trade policy uncertainty and global market impacts.
THE REPORT: The September 2025 update examines how trade policy uncertainty has reached unprecedented levels, reflecting industrial policy competition for critical raw materials and persistent concerns over trade imbalances. As rule-based trading systems weaken, countries face reduced constraints on policy shifts. Strategic ambiguity may become more widespread as countries update trade rules, further heightening uncertainty across global markets.
- Industrial policy and competition for critical raw materials are driving rounds of supportive trade measures across major economies.
- Persistent concerns over trade imbalances have increased calls for corrective trade measures from governments and domestic constituencies.
- Weakened rule-based trading systems, meanwhile, are providing little constraint against sudden policy shifts that affect international trade relationships.
- Strategic ambiguity may become more widespread as countries update trade rules, creating additional uncertainty in global policymaking processes.
WHAT'S AT STAKE: Trade policy uncertainty creates significant costs beyond tariffs and border controls, particularly affecting cross-border commerce efficiency and long-term investment decisions. Companies face increased operational complexity through excess inventory requirements, hedging costs, and constant supply chain reconfiguration.
- Long-term investments in factories, technology, and workforce development weaken as uncertainty discourages strategic planning and commitment.
- Small firms and vulnerable economies struggle to attract capital and sustain export strategies when major market access becomes uncertain.
- Financial pressures include tightened trade finance and higher borrowing costs, particularly for developing economies.
WHAT THE DATA SHOWS: United States import patterns demonstrate how policy uncertainty translates into measurable trade volatility, with pronounced differences across country development levels. Import variance spiked before April 2025 tariff implementation, suggesting uncertainty causes more disruption than actual policy changes.
- Developing nations experienced significantly higher import volatility compared to advanced economies during first half of 2025.
- Least developed countries showed delayed volatility spikes appearing only in second quarter, suggesting uneven policy transmission effects.
- Uncertainty over trade preference programme extensions and rules-of-origin frameworks compounds vulnerabilities for low-income exporters seeking access.
READING BETWEEN THE LINES: Data patterns reveal structural capacity differences in how economies respond to trade policy uncertainty across development levels. Advanced economies demonstrate better front-loading capabilities and transport mode switching, while developing countries face constraints from limited working capital and credit access.
- Small firms typically operate with restricted resources and less efficient infrastructure, making rapid adaptation substantially more challenging.
- Air shipments increased nearly ten per cent year-on-year in Q1 2025, with developed countries driving most increases at eighteen per cent.
WHERE THINGS STAND: Global trade data reveals how market diversification and trade agreements affect vulnerability to policy uncertainty across different economic structures. Countries with broader export bases demonstrate greater resilience by offsetting losses through alternative markets. China exemplifies this pattern, maintaining overall export growth in Q2 2025 despite declining United States shipments, while trade within agreements shows generally lower volatility.
- Market diversification enables countries to reallocate shipments when policy shifts restrict trade, cushioning revenue losses and production disruptions.
- China's exports rose sharply in Q2 2025 compared to first quarter globally, even as shipments to United States declined significantly.
- Trade agreements provide established rules and dispute settlement mechanisms that reduce sudden policy shift risks for participants.
- Recent volatility within regional trade agreements, including USMCA region, shows even protected relationships face disruption from policy unpredictability.
WHAT NEXT: UNCTAD has identified practical steps to restore trade stability and reduce strategic ambiguity effects across global commerce networks. These include providing advance notice of policy changes to enable consultation and adaptation, basing policies on clear data-driven reasoning, and promoting international coordination through multilateral institutions. Strengthening trade agreement commitments and diversifying export markets can cushion policy shift impacts.
- Advance notice of policy changes allows consultation time and enables firms to adjust operations and supply chains before implementation.
- Clear, data-driven policy reasoning signals purpose and rationale, helping companies and investors plan strategies with greater confidence.
- International coordination through UNCTAD and WTO can help members align responses, avoid retaliatory cycles, and establish contingency frameworks.
- Trade agreement strengthening through clear rules and effective dispute settlement reduces sudden shock risks and constrains strategic ambiguity.
