Global Trade Is Closing In: Tariffs and Restrictions Hit Record Levels

Global trade policy activity has risen to its highest level since comparable records began after the Global Financial Crisis, according to an updated index developed by economists from the World Trade Organization and the International Monetary Fund. The increase is being driven primarily by tariffs, import bans and other restrictive measures, indicating that governments are relying more heavily on trade policy to pursue economic resilience, industrial development and national security objectives.

Global trade is entering a more interventionist era. Governments are introducing tariffs, import restrictions, subsidies and other trade measures at the highest rate recorded since monitoring began after the Global Financial Crisis, according to an updated Trade Policy Activity Index developed by economists from the World Trade Organization (WTO) and the International Monetary Fund (IMF).

The increase is not confined to disputes between the world's largest economies. It is spreading across non-G20 countries and becoming embedded in industrial, security and resilience strategies, creating a trading system in which government decisions increasingly shape where goods are produced, how supply chains are organised and which markets businesses can reliably access.

Protection Is No Longer an Emergency Response

The updated index, which includes monthly data through May 2026, shows that global trade policy activity climbed throughout 2025 and reached a record level in early 2026. Between January and May 2026, overall activity was nearly twice as high as in 2024 and around 25 percent above the 2025 average. The figures indicate that governments are not merely reacting to isolated disruptions. They are using trade policy more frequently and across a broader range of economic objectives.

The index measures policy actions that governments have actually introduced, rather than perceptions of trade uncertainty or expectations about future restrictions. It draws on the WTO's Trade Monitoring Database and Global Trade Alert, providing a monthly picture of how official decisions are changing the conditions of international commerce.

Its historical movements closely track major periods of global disruption. Activity rose during the US-China tariff dispute in 2018 and 2019, the COVID-19 pandemic in 2020 and the war in Ukraine in 2022. A further wave began in 2025 and continued into 2026.

What distinguishes the latest rise is its persistence. Earlier surges were closely associated with identifiable crises. The current pattern suggests intervention is becoming a more routine feature of economic policy as governments place greater emphasis on domestic production, supply security and strategic industries.

Trade policy is thus moving beyond its traditional role of managing tariffs and market access. It is increasingly being used to influence industrial capacity, reduce perceived external dependencies and respond to geopolitical pressures.

Tariffs and Subsidies Are Redrawing the Competitive Map

Restrictive measures are driving the latest increase. Tariff rises, import bans and quantitative restrictions have expanded faster than any other category since 2025, according to the WTO-IMF analysis. At the same time, subsidies and other non-facilitating measures have continued to grow. Although subsidies do not necessarily block imports directly, they can reshape competition by lowering costs or reducing risks for selected domestic producers.

Trade-facilitating policies, including measures that reduce barriers or simplify customs procedures, have lost momentum. This widening gap between restriction and facilitation points to a global trading environment in which governments are becoming more willing to manage commercial outcomes rather than leave them primarily to markets.

For businesses, the result is greater complexity. Companies must consider not only production costs and customer demand, but also whether tariffs may change, imports may be restricted or competitors may receive state support. Decisions about suppliers, factories and inventories may increasingly depend on political exposure as much as commercial efficiency.

Large multinational companies may have the resources to shift production or diversify suppliers. Smaller exporters and manufacturers are likely to have fewer options when policies change abruptly. Compliance requirements, customs delays and the cost of finding alternative markets can weigh more heavily on firms with limited financial and administrative capacity.

Consumers may also feel the effects when restrictions reduce access to imported goods or increase costs along supply chains. The index does not measure the economic impact of every intervention, however. A large number of narrowly targeted measures may have less influence on global commerce than a smaller number of restrictions affecting major products or markets.

Trade Openness Survives, But Increasingly on Crisis Terms

During the Strait of Hormuz crisis, more than two-thirds of the measures introduced were intended to facilitate commerce and maintain the movement of goods. The response reveals an important tension in contemporary trade policy. Governments may impose restrictions to protect industries or manage strategic dependencies, but they can move quickly to lower barriers when disruption threatens access to essential supplies.

Trade facilitation is consequently becoming more conditional. Governments may support open markets when openness serves supply continuity, while relying on restrictions or subsidies when domestic resilience becomes the priority. This creates a system that is neither fully protectionist nor consistently liberal. Instead, trade rules are becoming more selective, shaped by the strategic importance of particular products, sectors and trading relationships.

The shift is also extending beyond the G20. Non-G20 economies have introduced substantially more measures in recent years, showing that interventionist trade policy is no longer primarily a feature of competition among the largest powers.

Governments across a wider range of economies appear to be using trade tools to pursue industrial development, strengthen economic resilience and address national security concerns. The rationale and effect of each measure may differ, but their combined expansion points to a broader redefinition of the state's role in international commerce.

For developing and smaller economies, this trend presents both opportunity and risk. Industrial support may help governments build domestic capabilities, but widespread subsidies and restrictions can also make it harder to compete in markets dominated by larger economies with greater financial capacity.

As more countries pursue their own resilience strategies, the collective result may be a less predictable and more fragmented trading environment, even when individual governments view their policies as defensive or necessary.

A Faster Warning System for a Less Predictable World

The WTO and IMF researchers are also testing a nowcasting model designed to estimate changes in trade policy activity before complete official data become available. The experimental system combines the Trade Policy Activity Index with commodity prices, uncertainty indicators and Google Trends data. Its early projections suggest activity may have increased again in June 2026, despite some moderation earlier in the year. The estimate remains provisional, and the model is still under development. However, the attempt to monitor policy activity in near real-time reflects a growing need among governments and businesses.

Trade measures can be announced and implemented quickly, while conventional databases may take longer to capture them. By the time a change appears in an official dataset, companies may already be facing new costs, documentation requirements or market-access restrictions. A reliable nowcasting tool could provide earlier warning of shifts in trade policy, helping businesses identify emerging risks and allowing policymakers to see whether restrictions are spreading across countries or sectors. Its usefulness will depend on whether it can distinguish temporary crisis responses from lasting changes in trade regimes. It will also need to capture the significance of individual measures, not simply their number.

The index nevertheless clearly warns that global commerce is increasingly shaped by active government intervention, with restrictive policies rising faster than measures designed to make trade easier.