Trump’s tariff may shrink global trade by 3%, shift exports to India, Brazil: UN expert

The new US tariff regime could shrink global trade by 3 per cent and significantly shift export flows from traditional markets like the US and China to emerging economies such as India, Canada, and Brazil, according to a top United Nations trade official, as PTI reported.
Pamela Coke-Hamilton, Executive Director of the International Trade Centre, warned on Friday in Geneva that US President Donald Trump’s aggressive tariff hikes—followed by China’s retaliation—are likely to cause long-term disruptions in international commerce and economic integration.
“Global trade could shrink by 3 per cent, with significant long-term shifts in trade patterns and economic integration,” Coke-Hamilton told PTI. “Exports from Mexico—which have been highly impacted—are shifting from markets such as the US , China, Europe and even other Latin American countries, with modest gains instead in Canada and Brazil, and to a lesser extent, India.”
The White House last week announced steep tariffs on imports, including a 145 per cent levy on Chinese goods. A 90-day pause on “reciprocal tariffs” has been granted to most countries, but not to China, which responded by imposing its own 125 per cent tariff on US imports.
According to PTI, the ongoing tariff war is causing widespread reorientation of supply chains. Vietnamese exports are being redirected away from the US , Mexico and China, with notable increases to the EU, Korea, and Middle East and North Africa (MENA) regions.
ALSO READ | Trump’s tariff rattles US importers; Woldenberg’s CEO calls it ‘end of days’
Coke-Hamilton cited the apparel sector as a key example. “Textiles is a top industry in terms of economic activity and employment for developing countries,” she said. Bangladesh, the world’s second-largest apparel exporter, would be hit with a 37 per cent reciprocal tariff if US measures proceed, potentially slashing $3.3 billion from its annual US exports by 2029.
She added that for developing nations to withstand such shocks—be it from trade policy shifts, pandemics, or climate disasters—they must prioritise diversification, value addition, and regional integration.
“There are opportunities for developing countries not just to navigate times of uncertainty, but to proactively prepare for the long haul,” she said.
Early economic modelling, developed with the French economics research institute CEPII, indicates that even before the latest wave of tariffs and China’s countermeasures, global GDP could be reduced by 0.7 per cent by 2040. Countries such as Mexico, China, Thailand, and nations in Southern Africa are among the most affected, along with the United States itself.
Meanwhile, the Asia Society Policy Institute (ASPI) in Washington has warned of broader geopolitical implications. Wendy Cutler, ASPI Vice President and Managing Director, said, “With China’s announcement of further tariff hikes against US imports, it’s clear that hopes that China would blink first in this trade war are misplaced. China is in for the long haul.”
Cutler noted that while Beijing may have reached the limit of symmetrical tariff retaliation, it likely has “other tools in its arsenal” that could be activated if tensions escalate.
“The steep tariffs now in place—145 per cent for Chinese imports into the US and 125 per cent for US imports to China—virtually halt all goods trade between the two largest economies in the world,” she said.
ASPI’s Vice President of International Security and Diplomacy, Daniel Russel, said Chinese President Xi Jinping is staying calm amid the crisis, waiting for Trump’s tariff policy to falter under domestic pressure.
“He’s betting that Trump’s tariff tantrum will collapse under the weight of the US market response,” Russel said. “By declaring it will ‘ignore’ future US tariff hikes, Beijing is not trying to win the trade war—it’s trying to outlast it and outmanoeuvre Trump.”
Russel added that China is pursuing a longer-term strategic advantage by shoring up ties with Southeast Asia, expanding its diplomatic clout, and subtly pressuring US allies. “Xi’s Southeast Asia tour is part of a strategy to reinforce economic partnerships while Washington lashes out and alienates its partners,” he said.