Navigating Global Trade and Digital Risks in 2025: Strategies for Businesses in a Fragmented World

On: January 29, 2025.

The growing fragmentation of the global economy, increased protectionism, and geopolitical tensions all contribute to significant changes in the international trade landscape. Global Trade Alert reports that the number of detrimental trade interventions rose from 600 in 2017 to over 3,000 per year in 2022, 2023, and 2024, with comparable numbers anticipated in 2025. These changes, cyber threats, natural disasters, and regional conflicts are testing global corporate resilience.

Chains are pushed to their limits. At the same time, the digital world faces challenges like cyber espionage, misinformation, and the unexpected consequences of AI technologies. As businesses confront these overlapping threats, experts recommend five key strategies for navigating this complex landscape and achieving enduring success. 

In the photo, Pedro Manuel Moreno, Deputy Secretary-General of UNCTAD. Cecilia Gutiérrez, Chief of Group Liaison, Intergovernmental Outreach Support Service of UNCTAD and H.E. Prasith Suon, Ambassador and Permanent Representative of the Kingdom of Cambodia, and Chair of the Group of 77 & China.Photo credit: UN Trade and Development/ William Albors

The Rise of Protectionism and Its Impact on Supply Chains.

The rise of protectionist policies and trade disputes has resulted in a more uncertain and expensive trading environment, leading to higher tariffs, export controls, and investment restrictions. As nations compete for supplies for technology and energy transitions, critical natural resources like lithium and rare earth metals have become flashpoints in global trade, forcing businesses to rethink their strategies.

Companies that rely on just-in-time (JIT) inventory systems are particularly vulnerable, as delays in receiving critical components can halt production and drive up costs. Meanwhile, the shift to just-in-case (JIC) inventory models, while prudent, increases inflationary pressures and economic costs.

The ambiguity of trade policies has created a "wait-and-see" mentality among companies, hindering innovation and investment. The UN Conference on Trade and Development reports that global foreign direct investment (FDI) decreased by 10% in 2023, partially due to the fragmentation of trade and regulatory environments.

In the photo, Mr. Cristobal Melgar, Chargé d’Affairs a.i. of Permanent Mission of the Republic of Peru. Photo credit: UN Trade and Development/ William Albors

Digital Risks: A Growing Concern.

While physical supply chains encounter considerable challenges, the digital landscape is just as susceptible. The Global Risks Report 2025 identifies misinformation, cyber espionage, and the adverse effects of AI technologies as significant concerns for global leaders. Cyberattacks targeting digital supply chains—encompassing software, cloud services, and data transfers—are increasing, particularly from state-sponsored actors focusing on critical infrastructure and intellectual property.

Misinformation and disinformation campaigns complicate the situation, undermining trust and leading to market instability. At the same time, the swift integration of AI technologies presents both opportunities and threats, such as algorithmic bias, deepfakes, and the risk of exploitation in cyber warfare.

Five Strategies for Navigating Global Trade and Digital Risks

To address these challenges, businesses must adopt a proactive and holistic approach. Here are five recommended actions:

1. Enhance Supply Chain Visibility.

Companies must invest in technologies that offer real-time visibility into their supply chains. Tools powered by AI, IoT devices, and blockchain platforms can enhance data analytics and insights, allowing organizations to pinpoint disruptions early and make well-informed decisions.

2. Diversify Supply Sources.

Minimizing dependence on a single supplier or region is essential for reducing risks. Companies should expand their supplier network and consider local or nearshore production options to guarantee a steady supply.

3. Invest in Cybersecurity and Holistic Cyber-Risk Strategies

As cyber threats increase, businesses need to prioritize cybersecurity first. This entails implementing strong security procedures, conducting frequent risk analyses, and educating staff members on data protection best practices. Resilience, insurance, and mitigation strategies should all be part of a complete cyber-risk plan.

4. Engage in Scenario Planning.

 Active planning is key to managing uncertainty. Companies can perform scenario planning exercises to evaluate the possible effects of trade policy changes, cyberattacks, and other risks. Having backup plans will help them react quickly to changing conditions.

 5. Advocate for Trade Agreements.

 A fragmented trade environment makes things more expensive and uncertain for companies. Policymakers should be contacted by businesses to advance bilateral, regional, and international trade agreements. Collaborative trade strategies can lower obstacles and promote a more stable economy.

Integrating Physical and Digital Resilience.

To prosper in this complicated environment, businesses must incorporate resilience into their digital and physical supply chains. This calls for dedication to data-driven decision-making and cross-functional cooperation between the supply chain, IT, and cybersecurity teams. Prioritizing sustainability and ethical practices is particularly important for firms looking to establish credibility and long-term viability.

The Path Forward.

While geo-economics conflicts and digital threats present significant challenges, they can be overcome. Companies can effectively traverse this complex landscape by building resilience and adopting proactive strategies.

Agility, creativity, and teamwork will be crucial to tackle challenges and seize new opportunities in the evolving global trade landscape. An industry analyst noted, "Companies that flourish in 2025 and the years ahead will be those that swiftly adapt, strategize effectively, and view change as a continuous element."

Reported with insights from the Global Risks Report 2025, Global Trade Alert, and the UN Conference on Trade and Development.