5 ways businesses can navigate global trade in today’s fragmented geoeconomic landscape
![Global trade and investment is being affected by uncertainty due to economic fragmentation and growing protectionism around the world.](https://assets.weforum.org/article/image/large_0OFIdHL0HaEJywRNaFVQKUJ4fRcRdwoGIeE-rmLvXrQ.jpg)
Global trade and investment is being affected by uncertainty due to economic fragmentation and growing protectionism around the world.
Image: Getty Images/skegbydave
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Trade and Investment
- The global trade environment is becoming more uncertain for businesses due to the rise of protectionism, increased trade disputes, and tariffs and trade barriers.
- This environment clearly affects physical supply chains but also has implications for digital supply chains and cyber-risk resilience.
- Businesses can take five steps to not only survive but thrive amid the risks posed to global trade and investment by economic fragmentation and protectionism.
The global business landscape could be reshaped by several pressing issues in 2025 and over the long term: risks of global economic fragmentation, the impact of protectionism on physical and digital supply chains, and the implications of both for cyber-risk resilience.
As businesses navigate an era marked by increasing economic tensions, it is vital they recognize that fragmentation is not just a theoretical concern, it is a reality that must be confronted today.
The rise of protectionism and increasing trade disputes have led to significant growth in tariffs and trade barriers worldwide. This is becoming even more evident as many nations push to secure critical natural resources to fuel technology innovations and energy transitions. According to Global Trade Alert, which tracks policy changes affecting global trade and investment, the number of harmful new policy interventions rose from 600 in 2017 to over 3,000 per year in 2022, 2023 and 2024, respectively. Similar levels could be reached in 2025 with significant impacts on global growth.
These interventionist trends have already created a more complex and uncertain trading environment, where businesses are forced to adapt quickly to shifting market dynamics. Indeed, geoeconomic confrontation – which includes sanctions, tariffs and investment screening – ranks third in current risks and ninth over a two-year horizon in the latest Global Risks Report from the World Economic Forum. The report is based on the Global Risks Perception Survey, a poll of more than 900 experts from academia, business, government, international organizations and civil society about the evolving global risks landscape.
![Bar chart showing top 10 risks respondents believe could create a material crisis on a global scale in 2025.](https://assets.weforum.org/editor/2u5z1cjjzpn5vRs7xnzlKO6AGOXDmfll6J2fXRKNQ5Y.jpg)
Geoeconomic confrontations and global trade
The implications of the current environment for our already fragile and stretched supply chains are profound.
Just consider how last year’s water shortages in the Panama Canal, severe flooding in many countries, regional conflicts in the Middle East and Europe, and multiple port strikes tested global supply chains to the breaking point. In 2025 and beyond, new tariffs and trade restrictions may further disrupt supply chains and increase costs, delays, and lost contracts.
Companies relying on just-in-time inventory systems may be challenged by significant delays in receiving critical components from suppliers. As a result, they may have to contend with higher prices that drive up the cost of their final products. This could also upend progress on reining in inflation in many countries.
Companies shifting to a just-in-case approach may be similarly challenged. While this move may seem prudent given expected protectionist policies, it will inevitably increase pressure on economic costs and inflation.
The uncertainty now surrounding trade policies could also lead to a "wait-and-see" strategy among businesses, stalling innovation and investment. The UN Conference on Trade and Development's recent World Investment Report noted that fragmenting trade and regulatory environments was among the key drivers of a 10% slump in global foreign direct investment in 2023.
Challenges for the digital world
In addition to their more recognizable impacts on physical supply chains, businesses must consider the implications of geoeconomic confrontations for digital supply chains and cyber-risk resilience. Given how highly misinformation and disinformation, cyber espionage and warfare, and the adverse consequences of AI technologies rank across time periods in the Global Risks Report 2025, such risks are clearly top concerns for global leaders, businesses, and societal stakeholders.
![Expert ranking of the likely severity of 10 specific risks over a 2-year and a 10-year period.](https://assets.weforum.org/editor/fFRiAsCq16L-MWOi4IXnbYMOrmEnpKXUr_Zw03CQoTY.jpg)
As governments tighten regulations and impose restrictions on data flows, businesses will need to navigate a labyrinth of compliance requirements. This will not only increase operational costs but also complicate the ability to leverage digital technologies that drive efficiency and innovation.
Moreover, the increasing focus on national security in trade policies raises the stakes for cyber risk. As governments implement measures to protect their domestic industries, there could be a rise in cyber espionage and attacks targeting foreign companies.
Businesses must also be vigilant in safeguarding their digital assets, sensitive information and operations in this fragmented economic environment, particularly as cyberthreats from a range of malicious actors escalate through existing and new methods of attack. At the same time, businesses must be prepared to respond to unintended cyber events such as global IT outages.
Navigating global trade risks in 2025 and beyond
There are five recommended actions for businesses that want to navigate these complex challenges:
1. Enhance supply chain visibility
Organizations should invest in technologies that provide real-time visibility into their supply chains. Using new AI tools and advanced devices to improve supply chain data, analytics, and insights will help them identify potential disruptions early and make informed decisions to mitigate risks.
2. Diversify supply sources
Businesses should consider diversifying their supplier base to reduce reliance on any single country or region. This will help mitigate the impact of tariffs and trade restrictions and ensure continuity of supply.
3. Invest in cybersecurity and holistic cyber-risk strategies
As cyber risks increase, businesses should focus on implementing robust security protocols, conducting regular risk assessments, training employees on data protection best practices and improving response capabilities. To be most effective, these efforts should be part of a comprehensive cyber-risk strategy that includes insurance, mitigation and resilience approaches.
4. Engage in scenario planning
Organizations should conduct scenario planning exercises to assess the potential impacts of various trade policy changes on their operations. This proactive approach will enable them to develop contingency plans and respond swiftly to changing circumstances.
5. Advocate for trade agreements
Finally, businesses should engage with policy-makers to advocate for the revival of multilateral, regional and bilateral trade agreements. Promoting more collaborative approaches to trade can help reduce fragmentation and foster a more stable economic environment.
The risks posed by economic fragmentation and protectionism are significant, but they are not insurmountable. By taking proactive steps to enhance supply chain resilience, invest in cybersecurity and advocate for a more collaborative trade environment, businesses can navigate these challenges and position themselves for success in an increasingly complex and fractured global landscape.
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