International commerce showed stronger-than-anticipated performance throughout 2025 but is now confronting significant new challenges stemming from American tariff measures and renewed instability in the Middle East. The latest UNCTAD Global Trade Update from April 2026 confirms that goods trade grew more robustly than forecast last year, though analysts expect a marked slowdown in 2026 due to ongoing policy uncertainties and increased expenses.
The primary driver of current pressures traces back to the broad tariffs implemented by the second Trump administration. Following major announcements in April 2025, U.S.-China trade flows shrank by about $170 billion during 2025. Much of the displaced Chinese exports have shifted toward European and developing markets, while American buyers rushed shipments ahead of higher duties. The World Trade Organization recorded 4.6 percent growth in global goods trade for 2025, supported by services and semiconductor demand linked to artificial intelligence. However, the WTO now projects expansion will fall to between 1.9 and 2.2 percent this year as tariff effects and retaliatory actions take fuller hold.
These developments have been worsened by military action in the Middle East. U.S.-Israeli strikes against Iran that commenced on February 28, 2026, led Iran to block the Strait of Hormuz, which normally handles around 20 percent of the world’s oil and LNG shipments. This triggered halted tanker movements, port closures including at Dubai’s Jebel Ali, and direct attacks on energy facilities. Brent crude prices spiked above $120 per barrel in early March before stabilising in the $92–$113 range by early April 2026. The U.S. Energy Information Administration anticipates Brent could reach near $115 per barrel in the second quarter of 2026, before declining to an average of $76 per barrel in 2027 if supplies gradually recover, though elevated risk premiums are likely to persist.
Energy markets have reacted strongly to these events. Diesel and gasoline costs have risen, with U.S. retail diesel expected to average $4.80 per gallon across 2026 and exceed $5.80 at peaks during April. The International Energy Agency responded with its largest-ever coordinated release of emergency oil stocks, totalling 400 million barrels, though experts caution this offers only short-term relief against possible ongoing disruptions of 5–20 million barrels per day. Elevated energy prices are contributing to higher overall inflation, increased shipping expenses, and accelerated efforts by companies to diversify supply sources.
Longer-term adjustments are also visible. Businesses are adapting to stricter U.S. export rules, sanctions, and national security measures by prioritising supply chain resilience through friend-shoring and near-shoring strategies. The IMF has lowered its global growth forecast to 3.1 percent for 2026, largely due to the impact of tariffs. Meanwhile, the upcoming WTO ministerial conference in Yaoundé may provide an opportunity to update trade rules, even as unilateral policies continue to challenge the multilateral system.
In essence, 2026 represents a period of transition and adaptation rather than outright contraction, with trade volumes being redirected, repriced, and restructured amid higher costs and geopolitical risks.
