Tariff Uncertainty Threatens Small Economies and Businesses

Small and medium-sized businesses alongside developing economies are at risk due to tariff uncertainty, according to UNCTAD's Secretary-General. Ongoing trade tensions, especially from U.S. tariff decisions, might weaken global investment further, particularly impacting vulnerable nations with higher tariffs like in Africa and small island states.

Small and medium-sized enterprises, along with developing economies, are facing increasing risks from a slowdown in investments amid ongoing tariff uncertainties. This warning comes from Rebeca Grynspan, Secretary-General of the UN Trade and Development Agency, who spoke with Reuters on Monday.

In an interview held at her Geneva office, Grynspan expressed concerns that small and medium-sized businesses globally, as well as smaller countries heavily reliant on trade and investment for growth, could experience significant setbacks. Despite the advancement of AI in driving trade and investment, its benefits remain concentrated in developed regions, excluding many emerging markets.

The global foreign direct investment experienced a second year of decline in 2024, with potential further reductions this year as trade tensions threaten investor confidence. As the U.S., under President Donald Trump, continues to implement tariff policy changes, markets face uncertainty. Grynspan highlighted that least developed countries, particularly in Africa and some small islands, suffer the most due to their lower resilience and higher tariffs compared to developed economies.

(With inputs from agencies.)