Global trade hit a record $33 trillion in 2024, growing by 3.7 percent annually or $1.2 trillion. In its latest report, the UN Trade and Development (UNCTAD) revealed that most regions saw positive growth, except for Europe and Central Asia.
Developing economies’ trade grew faster last year. Their imports and exports rose 4 percent for the year and 2 percent in the fourth quarter, driven mainly by East and South Asia. Meanwhile, developed economies saw their trade stagnate for the year and drop by 2 percent in the fourth quarter.
Services lead global trade growth in 2024
Services led the expansion in global trade in 2024, growing 9 percent annually and adding $700 billion, nearly 60 percent of the total growth. Trade in goods grew at a slower 2 percent, contributing $500 billion. However, growth in both sectors slowed in the second half of 2024, with services growing just 1 percent and goods less than 0.5 percent in the fourth quarter.
The report also revealed that the merchandise trade imbalances widened. The United States trade deficit with China reached -$355 billion, widening by $14 billion in the fourth quarter. Meanwhile, the U.S. deficit with the European Union increased by $12 billion to -$241 billion.
On the other hand, China’s trade surplus reached its highest level since 2022 and the EU reversed previous deficits, posting a trade surplus for the year, helped by high energy prices.
Uncertainty looms as trade wars escalate
UNCTAD also revealed that global trade remained stable in early 2025, but uncertainty looms. Mounting geoeconomic tensions, U.S. protectionist policies and trade disputes signal likely disruptions ahead. Recent shipping trends also suggest a slowdown, with falling freight indices indicating weaker industrial activity, particularly in supply chain-dependent sectors.
Today, about two-thirds of global trade occurs without tariffs, either because countries have chosen to reduce duties under most-favored-nation (MFN) treatment or through other trade agreements. However, tariff levels applied to the remainder of international trade are often very high, with significant differences across sectors. Agriculture remains highly protected, manufacturing still encounters trade barriers in key industries, while raw materials generally benefit from low tariffs.
Tariff escalation discourages developing economies from exporting value-added goods, hindering industrialization. This refers to the practice of applying higher tariffs on finished goods than on raw materials or intermediate inputs. Designed to protect domestic industries, this tariff structure also discourages manufacturing in countries that produce raw materials, creating a disincentive to move up the value chain.
Read: Trump says ‘no intention’ to alleviate steel, aluminum tariffs
Government policies to reshape global trade flows
Currently, governments are expanding tariffs, subsidies and industrial policies, reshaping global trade flows. The United States, European Union and other players are increasingly tying trade measures to economic security and climate goals, while China is using stimulus policies to maintain export momentum.
This policy realignment is contributing to increased uncertainty. Rising protectionism, particularly in advanced economies, is triggering retaliatory measures and adding more trade barriers. Meanwhile, industrial policies are reshaping key sectors like clean energy, technology and critical raw materials, risking competition distortion.
The report noted that as trade uncertainty grows, global cooperation and balanced policies remain critical. While China’s stimulus measures and lower inflation in some regions could support trade, protectionism and shifting policies in major economies remain key risks. The challenge in 2025 is to prevent global fragmentation while managing policy shifts without undermining long-term growth. The actions taken now by governments and businesses will shape trade resilience for years to come.
