For years and decades, the playing ground of International Trade was defined by openness and rapid expansion. It was still technically complicated to enter new markets because of the cultural, and regulatory barriers, etc. but for many years exporters haven’t heard about geopolitical tensions, tariff wars, and consequently, rising government protectionism.
Small and medium-sized exporters, the most vulnerable players in the global trade found themselves in the crossfire of these complications.
What is happening and why the Old Trade Order is no longer in place?
In short, global trade becomes highly fragmented. It can be summarized the following into a few trends:
1.Geopolitical Tensions & Sanctions
- U.S. (merchandise importer) -China (merchandise exporter) tariffs still shaping global flows. The most recent update was 145% (US tariffs on Chinese goods) and 125 (Chinese tariffs on American products).
- Russia-related restrictions (esp. for EU firms)
2.Shift from Multilateralism to Bilateralism
- WTO rules weakening
- More regional/bilateral FTAs: EU–Vietnam, RCEP, EU–Chile, etc.
- Fragmented rules of origin and compliance
3.“Friendshoring” and Derisking Trends
- IMF, OECD pushing “strategic autonomy” over global efficiency
- SMEs must adapt to new expectations from partners and governments
As a result of new rules applied in this New Trade Order, efficiency is no longer enough. Companies – exporters need to be very quick, adaptable, and resilient.
This is hard to predict how the current situation of the American trade war against “the enemies and friends” will affect exporters in different countries, but one thing is clear: exporters should prepare themselves for changes as fast as possible.
What does this mean for SMEs?
The whole international trade landscape is shifting. Suppliers are no longer reliable, the costs are volatile. Every time exporters are looking for new markets and opportunities, they should think twice. This, in turn, means more costs associated with export readiness, operations, partner search and also with higher risks.
How to stay competitive?
There are a few key steps companies have to put their efforts into:
- Track policies and tariff changes in real time. Use business intelligence tools to centralize the update. Don’t miss key reports from organizations like UNCTAD, World Economic Forum, WTO
- Evaluate and diversify the export markets. At this moment it’s better to leave the risky markets, even though they might seem attractive (because of local market size etc.)
- Rethink supply chain strategies. This might be time to reconsider the portfolio of customers and suppliers, supply chain, and logistics partners. Prioritize agility over cost.
- Invest in market intelligence and digital tools. Modern technologies are here to help exporters decrease export risks through access to business intelligence, market prioritization and strategic expansion preparation. They also help to cut costs on export operations.
What’s next?
Everyone knows that the situation with international trade volatility is going to stay with the world for a long time. A New Trade Order is here and isn’t going to leave. However, at the time of Industry 4.0, exporters can access the right markets and potential customers at a fraction of the costs they had to bear in the past.
Manatex.digital organizes offline and online AI training sessions for exporters, trade promotion agencies, and associations to educate organizations on how to profit from AI-powered solutions, boost productivity and decrease cost.
