World Trade Uncertainty Index at Record High

The WUI index quantifies the overall sentiment by considering the occurrence of positive and negative words in the Economist Intelligence Unit country reports. It stood at 14,606 in June 2024 and has steeply risen to 84,305 in June 2025. In early 2025, volatility in US imports increased compared to the previous year, even before tariffs came into force, as companies scrambled to adjust. The cost of uncertainty itself often outweighs the tariff.

Firms face difficult choices like stockpiling goods, rerouting shipments or paying higher transport costs. Uncertainty spills far beyond ports. Exchange rates swing, capital flows tighten and borrowing costs rise.

When tariffs are expected to rise but their implementation date remains unclear, importers often react pre-emptively. Many accelerate shipments, “front-loading” goods to stockpile inventory before higher tariffs take effect. Others shift from slower and cheaper sea freight to faster, though more expensive, air cargo.

Small exporters and developing economies bear the heaviest burden, with limited finance or logistics to cushion the shock. Small firms, particularly those in developing and least developed countries, face greater challenges in adapting. Their exports often consist of bulky, low-value products, and they typically operate with limited working capital, restricted access to credit, lack of spare production capacity, and less efficient shipping infrastructure. These constraints make it harder for them to respond swiftly, deepening their vulnerability in an already uncertain trade environment.

For developing countries, where access to trade finance is already scarce, this translates into squeezed credit and curtailed investment. With global interest rates still high, the added burden of unpredictability deepens fiscal fragility – limiting governments’ ability to fund growth and social development.

However, most damaging is the breakdown of confidence. When policies are unclear or rules selectively applied, governments turn to unilateral actions that invite retaliation.

Diversifying markets, strengthening trade agreements and giving firms advance notice of policy shifts can reduce risk. Above all, restoring stability and predictability is essential – for businesses to invest, for countries to grow and for trade to fulfil its role as a driver of development.

UNCTAD wants economies to provide advance notice of policy changes to both domestic and foreign to adjust operations and supply chains, base policies on clear, data-driven reasoning, help companies and investors plan investment, production and trade strategies with confidence, and promote international coordination.

Institutions such as UN Trade and Development (UNCTAD) and the World Trade Organization (WTO) can help members align responses, avoid retaliatory cycles, and establish contingency frameworks, it said.