The United Nations Conference on Trade and Development (UNCTAD) has raised concerns regarding the impact of President Trump's tariff policies on global trade and supply chains. Rebeca Grynspan, Secretary-General of UNCTAD, noted that the current climate of uncertainty is disrupting business decision-making, which negatively affects trade and investment. She indicated that global investment is at levels reminiscent of the financial crisis and projected a reduction in global growth of half a percentage point this year, with GDP growth now expected to be 2.3%, down from 2.8%.
Grynspan highlighted the potential adverse effects on developing nations, particularly in Asia, which have been integrated into the global supply chain through the "China Plus One" strategy. Countries such as Vietnam, Cambodia, and Malaysia are already feeling the repercussions of shifting supply chains, with Grynspan warning that the layering of tariffs could lead to a significant decline in exports from the least developed countries, potentially exceeding 50%.
Specifically, Cambodia, where U.S. exports represent over 10% of its GDP, might face substantial economic losses, with estimates suggesting a decline of over $4.5 billion in exports, particularly in the garment sector. Grynspan acknowledged that while the Trump administration's intention to negotiate trade agreements is a positive development, the complexity and duration of these negotiations contribute to ongoing economic uncertainty.
Additionally, Grynspan pointed to rising inflation pressures linked to geopolitical tensions, particularly recent attacks on vessels in the Red Sea by Houthi forces, which are increasing marine insurance costs and contributing to global price inflation. She underscored the importance of stable trade routes, noting that disruptions can have widespread consequences for international trade.