SMEs Face Heightened Risks from Tariff Uncertainties Amid Global Trade Shifts

As trade dynamics continue to evolve, small and medium-sized enterprises (SMEs) and developing economies face significant risks stemming from ongoing tariff uncertainty. The Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), Rebeca Grynspan, emphasized these concerns in a recent interview. Grynspan stated, "We fear that there will be more lagging numbers in terms of investment," highlighting that SMEs worldwide are likely to suffer due to fluctuating market conditions. She noted that developing nations, which often rely heavily on trade and foreign investment for their economic growth, could be disproportionately affected. Despite advancements in artificial intelligence contributing positively to trade and investment this year, Grynspan warned that these benefits are not evenly distributed. "We fear small and medium-sized businesses will be affected everywhere, but also small countries that depend much more on trade and investment to really seek growth," she remarked. A report released by UNCTAD in July indicated that global foreign direct investment (FDI) had decreased for the second consecutive year in 2024. Grynspan expressed concern that the current year might see even lower investment levels due to persistent trade tensions that are undermining investor confidence. Since the beginning of his presidency, U.S. President Donald Trump's tariff policies have contributed to fluctuations in financial markets, creating a climate of uncertainty in the global economy. Looking ahead, Grynspan explained that projections for 2026 depend significantly on whether current trade disputes escalate into a broader trade conflict or if the existing high tariffs remain in place as trade negotiations progress. In her comments, she noted, "There is uncertainty, but there will be more predictability. The markets will adapt to the new situation," implying that businesses will find ways to navigate these changes over time. Particularly at risk are the least developed countries in Africa and small island nations, which face additional challenges due to higher tariffs imposed on them compared to those on developed countries. For example, while the European Union has established a 15% tariff on many goods exported to the United States, countries like Laos endure tariffs as steep as 40%. Grynspan called upon the U.S. government to reconsider its tariff strategies regarding vulnerable nations. She cited Lesotho, where the recent modification of its tariff rate to 15% was a critical development after earlier threats of a 50% tariff.