Unilateral trade measures, retaliation may cascade race to bottom: ICC

Tariffs would also raise cost of inputs, many of which are imported, further affecting domestic exporters higher up the value chain, international companies across various industries and regions felt.

The consultations were conducted to explore the evolving shift in trade policies, including tariffs and their potential impact on business operations.

A strong, rules-based global trading system anchored in a fully-functioning World Trade Organization (WTO) remains a top concern for businesses, which need stability, transparency and predictability to make informed long-term trade, business and investment decisions.

New trade policies and instruments are expected to affect a much larger array of firms. Many that were previously unaffected by rising protectionism now anticipate being directly affected.

This challenge is further compounded by a post COVID-19 trade environment characterised by higher interest rates, sticky inflation, record debt levels and geo-economic fragmentation, ICC said in policy brief.

Businesses have strengthened their defences against abrupt changes in trade policies. They have already been responding to geopolitical pressures and tariff uncertainty by diversifying from different geographic locations, stockpiling inputs, and adjusting pricing and cost absorption strategies.

However, these costly adaptations are affecting profitability and investment, while providing no failsafe against major trade disruptions.

Efforts to strengthen supply chain resilience, including reshoring, are constrained by a shortage of skilled workers and related suppliers, which will take time to address, ICC found.

Active and continuous negotiations among governments, incorporating industry perspectives, are essential to address evolving challenges and seize new opportunities, it added.

Fibre2Fashion News Desk (DS)