UNCTAD Report Warns of Economic Slowdown Amid Escalating US-China Trade Tensions

The United Nations Conference on Trade and Development (UNCTAD) has released its "World Economic Situation and Prospects 2025" report, forecasting a decline in global economic growth to 2.3% for 2025, down from 2.8% in 2024. This slowdown is largely attributed to escalating trade tensions between the United States and China, marked by unprecedented tariff increases and retaliatory measures.

The escalating trade war between the world's two largest economies has disrupted global supply chains, heightened economic uncertainty, and raised concerns about a potential global recession. UNCTAD warns that continued trade restrictions and geopolitical confrontations could severely disrupt international trade flows and production chains, further dampening global economic activity.

In early 2025, the United States implemented a series of tariff increases on Chinese imports. On February 1, 2025, President Donald Trump signed Executive Order 14195, imposing a 10% tariff on all Chinese goods, citing national security concerns. This tariff was subsequently increased to 20% on March 4, 2025. Further escalations led to tariffs reaching up to 145% on certain Chinese goods, significantly disrupting financial markets and raising concerns about a potential U.S. recession.

In response, China imposed a 34% tariff on all U.S. products starting April 10, 2025. Additionally, China announced export controls on rare earth elements, critical for high-tech industries, and suspended imports of certain U.S. agricultural products.

The escalating tariffs have disrupted global supply chains, leading to increased costs for businesses and consumers. Companies like Tesla have faced production delays due to the high tariffs on Chinese components, affecting their plans for new product launches.

The heightened trade tensions have created an environment of uncertainty, causing businesses to delay investments and hiring. UNCTAD's report highlights that record-high policy uncertainty is further weakening economic activity.

UNCTAD warns that continued trade restrictions and geopolitical confrontations risk severely disrupting international trade flows and production chains, further dampening global economic activity. The agency advises the U.S. administration to exempt the poorest and smallest economies from tariffs, emphasizing that such exclusions would not undermine its trade policy objectives.

The slowdown in global economic growth disproportionately affects developing countries, many of which are still recovering from previous crises. Persistent food inflation, combined with low economic growth, risks pushing millions further into poverty.

Businesses delaying investments and hiring due to economic uncertainty can lead to higher unemployment rates, affecting livelihoods and increasing social unrest.

Trade tensions between the U.S. and China have been escalating over the past few years, with both countries imposing tariffs and countermeasures. However, the recent increases to tariffs as high as 145% represent an unprecedented escalation, significantly impacting global trade dynamics.

The UNCTAD report underscores the fragile state of the global economy, emphasizing the need for multilateral cooperation to address trade tensions and economic uncertainties. Policymakers are urged to consider the broader implications of protectionist measures and work towards solutions that promote sustainable economic growth and development.