UNCTAD Chief Warns Global Trade System Under Threat as Tariffs Skyrocket and Debt Crisis Halts Development

Rebeca Grynspan, Secretary-General of the UN Trade and Development (UNCTAD), today warned that the rules-based international trading system is under severe strain, risking a damaging global tariff war that threatens to derail development gains.

Addressing representatives from UNCTAD’s 195 Member States in Geneva, Ms. Grynspan emphasized that preserving the framework established by the World Trade Organization (WTO) is essential, noting that 72 per cent of global trade still moves under WTO rules.

“We have for now avoided the domino effect of tariff escalation that once brought the world economy to its knees in the 1930s,” Ms. Grynspan stated. “This didn’t happen by accident; it happened because you kept negotiating when it seemed pointless, defending a rules-based system even as you were to reform it, and building bridges even when they fell.”

The UNCTAD chief highlighted that rising tariffs applied by major economies, including the United States, have jumped dramatically this year, from an average of 2.8 per cent to more than 20 per cent. This increase in economic uncertainty is acting as “the highest tariff possible,” discouraging investment and slowing growth.

The crisis is most acute for developing nations, who face “impossible choices” between defaulting on their debt or defaulting on their development commitments.

“A debt and development crisis is still facing countries with impossible choices,” she warned.

Echoing this concern, UN General Assembly President Annalena Baerbock, also present, noted that developing country debt reached $31 billion last year, forcing governments to service debt instead of investing in essential public services like education and healthcare.

Ms. Grynspan further cautioned that global investment flows are retreating for the second consecutive year, with the current investment system heavily favoring richer economies. The cost of a single U.S. dollar of investment can be up to three times more expensive in highly indebted nations.

Other key challenges highlighted include:

• Volatile Freight Costs: Landlocked countries and small island developing states face transport bills up to three times the global average.
• The Digital Chasm: While Artificial Intelligence (AI) promises to add “trillions” to global GDP, a staggering 2.6 billion people remain offline, the majority being women in developing countries. Fewer than one in three developing countries have a strategy to capture the benefits of AI.

The Secretary-General stressed that trust in the international system is “eroding,” underscoring the urgency for collective action to ensure global trade remains a sustainable pathway to development for all nations.

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