While the need for trade reform is clear, UNCTAD stresses that the solution must come through dialogue and negotiation. Trade imbalances, concentrated gains and outdated rules must be addressed without sacrificing those least responsible.

As major economies are set to impose sweeping new tariffs, UN Conference on Trade and Development (UNCTAD) alerts that the global trade system is entering a critical phase – threatening growth, investment, and development progress, particularly for the most vulnerable economies.

“This hurts the vulnerable and the poor,” said UNCTAD Secretary-General Rebeca Grynspan. “Trade must not become another source of instability. It should serve development and global growth.”

For businesses and policymakers alike, unpredictability and uncertainty in trade and investment is becoming a serious obstacle to growth and planning.

Reports coming in from the US say that customs began enforcing President Trump’s 10 per cent tariff on many imports Saturday, with higher rates on goods from 57 major partners starting next week, signaling a shift from post-WWII trade norms.

Industrial goods include non-agricultural products like machinery, vehicles, IT equipment, metals, chemicals, textiles, and fish. Tariffs on these goods are either percentage-based or specific. About 94 per cent of US imports are industrial, with a 2 per cent average tariff rate. Half of these imports have, so far, entered duty-free into the United States.

Vulnerable countries most impacted

Just 10 of the nearly 200 US trade partners account for almost 90 per cent of its trade deficit. Yet, for example, least developed countries and small island developing states – responsible for just 1.6 per cent and 0.4 per cent of the deficit, respectively – are being affected. They will neither help balance the trade deficit nor generate significant revenue.

Many low-income economies now face a “perfect storm” of worsening external conditions, unsustainable debt levels, and slowing domestic growth.

Time for dialogue, not escalation

While the need for trade reform is clear, UNCTAD stresses that the solution must come through dialogue and negotiation. Trade imbalances, concentrated gains, and outdated rules must be addressed – without sacrificing those least responsible.

“This is a time for cooperation – not escalation,” Grynspan said. “Global trade rules must evolve to reflect today’s challenges, but they must do so with predictability and development at their core, protecting the most vulnerable.”

UNCTAD calls on decision makers to urgently reconsider the tariffs imposed on the vulnerable countries, as these measures could inflict great pain on millions of people.

What UNCTAD says:

• Global economic growth could decline further: In a low-growth, high-debt global economy, higher tariffs risk weakening investment and trade flows – adding uncertainty to an already fragile context. This could erode confidence, slow investment, and threaten development gains, particularly in the most vulnerable economies.
• The most vulnerable will bear the highest cost: Economies with minimal responsibility for global trade imbalances are facing severe penalties – despite being the least equipped to absorb new shocks.
• Dialogue – not escalation – is the only path forward: The need for trade reform is clear. Trade imbalances, concentrated gains, and outdated rules must be addressed – without affecting those least responsible.

In the meanwhile, American TV personality and market commentator Jim Cramer warned that Monday could witness the worst single-day drop since 1987’s “Black Monday,” when markets worldwide crashed, led by the US Dow Jones Industrial Average, which plunged 22.6 per cent.

Jim Cramer warned that markets might face a bloodbath similar to 1987 – when the Dow Jones suffered its biggest single-day crash to date. He claimed that if the US President didn’t ‘reach out’ to nations which have not imposed retaliatory tariffs and reward them for their compliance, the situation could worsen.

Nobody Wins in Trade War, says UN Chief

Simultaneously, the UN Secretary-General Antonio Guterres voiced concern over President Donald Trump’s far-reaching new tariffs on nearly all US trading partners, asserting that in a trade war, nobody wins.

“Our concern right now is with the most vulnerable countries who are the least equipped to deal with the current situation,” his Spokesperson Stephane Dujarric told reporters at the regular noon briefing in New York in response to a question.

Asked how would the tariffs impact the anti-poverty Sustainable Development Goals (SDGs), Dujarric said, “Negatively.”

On Thursday, Trump announced new tariff hikes that shocked governments and investors around the world, swiftly spurring both threats of retaliation and calls for negotiation as industries scrambled and global stocks tumbled. As a result, US stocks slid down further on Friday while China reacted to the trade tariffs with a 34 percent charge on all American imports into the country.