Global trade to hit record $33 trillion in 2024, but uncertainties over tariffs loom

However, concerns loom for 2025, where the risks include escalating trade wars, geopolitical tensions and shifting policies, clouding the outlook.

According to the UN trade and development body (UNCTAD)’s Global Trade Update, the projected figure for this year marks a $1 trillion increase over 2023, driven by robust 3.3 per cent annual growth.

A significant contributor was trade in services, which surged by seven per cent, accounting for half of the total expansion and adding $500 billion to global trade value. Goods trade, while growing at about 2 per cent, has remained below its 2022 peak.

Uncertainties cloud 2025

While 2024’s trade performance reflected resilience, the outlook for next year is uncertain, primarily due to potential policy changes in the United States under the incoming administration.

“The 2025 trade outlook is clouded by potential US policy shifts, including broader tariffs that could disrupt global value chains and impact key trading partners,” UNCTAD said.

Such measures risk triggering retaliation and ripple effects, affecting industries and economies along entire supply chains.

“Even the mere threat of tariffs creates unpredictability, weakening trade, investment and economic growth,” the UN body warned.

Risks of change in US policies

Countries most exposed to changes in US trade policy are likely those with large trade surpluses with the country and higher tariff barriers. Based on 2023 figures for trade in goods, these include China (about $280 billion trade surplus), India ($45 billion), the European Union ($205 billion) and Viet Nam ($105 billion), according to UNCTAD.

Other nations with trade surpluses, including Canada ($70 billion), Japan ($70 billion), Mexico ($150 billion) and the Republic of Korea ($50 billion), may also face some risks, despite imposing relatively lower tariffs on US imports or having established trade agreements with the country.

Adding to the uncertainty is the trajectory of the US dollar and macroeconomic policy shifts, add to global trade concerns.

Third quarter results

According to the report, developed economies led the growth in the third quarter of 2024 on the back of stable demand and favourable business conditions.

In contrast, developing economies, traditionally strong drivers of global trade, faced headwinds with contracting imports and a decline in South-South trade. Other sectors also faltered, with energy trade declining two per cent in Q3 and an overall seven per cent over the year.

Metals trade also contracted three per cent – both quarterly and annually, while the automotive sector posted a three per cent drop in the quarter, despite an anticipated four per cent annual growth.

High-growth sectors like information and communications technologies (ICT) and apparel, recorded strong growth, surging 13 per cent and 14 per cent over the third quarter.

A Singaporean cargo ship docks in a northern European port, having navigated the busy East Asia-Europe transit.

Regional focus

On a national level, Japan led with a five per cent increase in goods exports and a 13 per cent annual rise in services exports. The United States also recorded a four per cent rise in merchandise imports on both a quarterly and annual basis.

The European Union sustained growth in services traded, with positive projections for the year.

However, developing economies struggled, with China recording an exports’ decline of two per cent for Q3, although its services sector saw a 9 per cent annual rise in exports.

India also faced quarterly declines in goods trade but posted modest annual gains, while trade in East Asia largely stalled, with flat imports and a marginal one per cent growth in exports.

Call for policy action

UNCTAD Secretary-General Rebeca Grynspan emphasised the importance of strategic policy action in developing economies to enhance trade diversification and invest in high-value sectors to mitigate risks.

“Trade remains a cornerstone of sustainable development,” she said.

“To seize the opportunities in 2025, developing economies need coordinated support to navigate uncertainty, reduce dependencies and strengthen their links to global markets.”