Q2 Business Challenges & Strategies
The international trade environment in 2025 is marked by sharp policy shifts, rising tariffs, and unprecedented uncertainty. The World Trade Organization (WTO) and other global institutions warn that these disruptions are reshaping supply chains, dampening business confidence, and threatening growth—especially for export-dependent and vulnerable economies 1 3 7 8.
Key Trade Issues Impacting Businesses
Rising Tariffs and Retaliation: The US has implemented sweeping tariffs—some at historic highs—prompting major trading partners, including China, to respond in kind. These measures have driven the global effective tariff rate to levels not seen since the Great Depression 2 3 7.
Trade Policy Uncertainty: Policy unpredictability has soared, with businesses facing abrupt changes in trade rules and tariff schedules. The Economic Policy Uncertainty Index is at its highest in decades, causing companies to delay investments and reassess supply chain strategies 2 8.
Slowing Trade Growth: The WTO forecasts a 0.2% decline in global merchandise trade for 2025, with North American exports projected to fall by 12.6%. In a worst-case scenario, trade could contract by 1.5% if tensions escalate further137.
Geoeconomic Fragmentation: As countries pursue more protectionist and regionally focused trade policies, supply chains are fragmenting. This trend is compounded by “friendshoring” and nearshoring strategies, as companies seek to reduce exposure to high-tariff regions 9.
Disproportionate Impact on Vulnerable Economies: Least-developed and export-dependent countries are being hit hardest by shrinking demand, higher costs, and reduced access to development finance 1 5 8.
Selected Tariff Actions (April 2025)
The United States has implemented tariffs of up to 125% on imports from China, prompting China to respond with equivalent retaliatory tariffs and additional export controls, including restrictions on rare earth minerals 8 10. Canada is also subject to new tariffs ranging from 10% to 25%, with specific increases on vehicles, although some exemptions apply under the United States-Mexico-Canada Agreement (USMCA) 6 9. For Cambodia, Switzerland, and Thailand, high tariffs—49%, 32%, and 37% respectively—are set to take effect but have been delayed until July 9, 2025 7. The group referred to as BRICS 2 faces a threatened tariff rate of 100% on all products, signaling possible escalation if negotiations fail 7. Meanwhile, Belarus and Cuba have been exempted from reciprocal tariffs at this time, reflecting selective application of these measures 7. These actions are part of a broader trend of rising protectionism and policy uncertainty, with tariffs being used as tools for economic leverage and retaliation across key global markets.
Strategies for Navigating the Current Trade Environment
Diversify Supply Chains: Reduce reliance on any single market or region. Explore new suppliers in countries not subject to the highest tariffs, and consider nearshoring to improve resilience 8 9.
Monitor Policy Developments: Stay informed about tariff changes, trade agreements, and regulatory shifts. Use reliable sources and industry updates to anticipate disruptions 1 2 3.
Scenario Planning: Prepare for multiple outcomes by modeling the impact of various tariff and policy scenarios. Establish trigger points for adjusting sourcing, pricing, or inventory strategies 8.
Optimize Inventory Management: Avoid overstocking goods subject to high tariffs. Use bonded warehouses or free-trade zones to defer duties where possible 8.
Transparent Communication: Clearly explain necessary price adjustments to customers and partners, emphasizing the external factors driving changes.
Leverage Legal and Compliance Support: Engage trade professionals to interpret new regulations, identify potential exemptions, and ensure compliance with evolving rules. This support is especially valuable for navigating disputes, applying for relief, and structuring contracts to mitigate risk 2 8.
Looking Forward
The global trade system is in flux, with uncertainty likely to persist. Businesses that proactively adapt—by diversifying supply chains, staying informed, and seeking timely legal and compliance guidance—will be best positioned to weather ongoing volatility and safeguard long-term growth 1 2 3 8.