At this year’s World Economic Forum Annual Meeting in Davos, Switzerland, trade featured prominently as participants unpacked the potential return of tariffs and other new trade trends. Here are eight things we learned during the week.
1. Tariffs are back – but what will they mean?
United States President Donald Trump spoke virtually on Thursday, pledging to lower corporate taxes and charge tariffs on firms not manufacturing in America. The US leader also suggested the US trade deficit with Canada would be solved by the latter becoming the 51st state.
Despite strong trade rhetoric, World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala called on participants to “chill” and avoid talking the world into a trade war.
2. Bi-globalization, re-globalization?
Participants debated the severity of potential global economic fragmentation. By some estimates, geopolitical bloc-based trade could cost the global economy up to $6.75 trillion. Others were more optimistic.
“There is no contradiction between economic fragmentation and the continuation of the increase in global trade – it’s just that you don’t trade with the same people,” said Gilles Moëc, AXA Group Chief Economist.
Many discussions focused on supply chain concentration and the pros and cons of diversification.
“We have seen a lot of concentration of supply chains or manufacturing in certain sectors. We need to build resilience by something we call re-globalization,” said WTO Director-General Ngozi Okonjo-Iweala. “The world needs to decentralize certain supply chains so that we can build resilience.”
In connection with these debates, some participants argued trade needs to be adapted to national security.
“You want to make sure you have your strategic autonomy…You want to make sure that you have some export controls on high tech so it is not available to countries with a strategic cyber intent on the Western world,” said Dick Schoof, Prime Minister of the Netherlands.
3. Make new friends
Just as traditional alliances appear shaky, others emerge. European Union (EU) Trade Commissioner Maros Sefcovic highlighted the recent work to conclude an EU-Mercosur deal, upgrade a partnership with Mexico and re-engage in trade talks with India and Malaysia.
“My diary here is all [Gulf Cooperation Council] countries and many countries in Southeast Asia,” said Sefcovic. “There is huge interest in the biggest trading bloc, in what Europe represents in this very fragmented and tumultuous world, to be a solid partner.”
The new trade context may even help mend recent break-ups. The EU trade chief suggested the bloc could consider talks for the United Kingdom to join a pan-European customs area.
Regional integration continues to hold promise. The Association of Southeast Asian Nations (ASEAN) is working to conclude an ASEAN Digital Economy Framework Agreement to upgrade trade for an intelligent age. ASEAN will also be working on ASEAN integrated power grid to maximize the potential of green energy.
4. Get prepared
No matter the future of trade prediction, many business participants are ramping up preparations to cope with trade uncertainty.
A new report by the Forum, in collaboration with IMD Business School and Boston Consulting Group, suggests business sharpen their geopolitical radar. That means building capacity to track, assess and respond to geopolitical developments that might affect supply chains or the organization before they become full-blown crises.
To complement this foresight, senior business leaders in Davos mandated a new Trade Compliance Practitioners group to exchange good practices on the emerging board priority of trade compliance obligations.
5. Taking TradeTech seriously
Trade and technology are increasingly interconnected, with digital solutions offering significant potential to address global trade challenges.
TradeTech can simplify trade processes, improve trust, boost supplier visibility and diversification and unlock finance. Getting the technology right for customs can even speed up the delivery of humanitarian aid.
“Fragmentation and uneven adoption of technology is going to be an issue. We have to take the lead,” said Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade of the United Arab Emirates.
“That’s why, in close collaboration with the World Economic Forum, we work on the TradeTech initiative,” he said, explaining how the public-private partnership can accelerate technology for trade to boost global trade by 14% by 2040.
A new report highlights concrete examples of AI transforming trade processes, showcasing its real-world impact. High-level discussions on AI and blockchain and their impact on global trade will continue during the 2025 TradeTech Forum.
6. Trade can be a force multiplier for climate policies
Trade can drive green growth, by spreading technologies and when countries produce what they are most environmentally good at. That means countries produce goods where they can lower carbon emissions and trade those with nations without the same advantage.
“A place like Morocco could be an origin place for green ammonia. A place like Brazil could be a centre for sustainable aviation oil,” said Zhang Lei, CEO of Envision. “So, we see this climate transition is bringing significant impact on global trading routes, and this…is going to create new prosperity for so many developing countries.”
The Forum and the WTO collaborate on the Action on Climate and Trade to work with specific countries to identify their green comparative advantage.
7. Streamlining services trade
Services play a significant role in the global economy, worth about 65% of global gross domestic product, 60% of foreign direct investment and 50% of global employment. Addressing service trade barriers would unlock more opportunities.
“What stands out about services is the opportunity they offer to the young demographic, enabling them to develop skills and shine,” said Jumoke Oduwole, Federal Ministry of Industry, Trade and Investment of Nigeria.
Scaling global businesses requires regulatory transparency and predictability, strategic investments and a focus on fostering innovation. A Forum community has launched Streamlining Services to grow services trade.
8. Improving labour conditions in the supply chain
Across the globe, millions are still in forced labour. Better data tracking through supply chains could help reverse a growing trend.
As in so many other areas, greater visibility and understanding of real-life trade dynamics would yield better decision-making and outcomes.
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