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Trade Hits $35 Trillion: 4 Global Shocks
The week of December 7-13, 2025, in the Global Trade Update category presented a contradictory picture: one of record-breaking expansion, yet shadowed by persistent geopolitical risk. The key domestic event for India was the renewed push to resolve the crippling 50% US tariff, while globally, a new report confirmed that the overall value of world trade is set to reach an all-time high.
For exporters like The Exporter Hub members in Bharuch, these dynamics create both a strong, demand-driven global market and an urgent need to secure policy stability through trade negotiations.
1. 🇺🇸 India-US Tariff Talks Intensify to Resolve $\text{50\%}$ Duty
The most critical development for Indian exporters this week was the high-level visit of a US delegation, led by Deputy U.S. Trade Representative Rick Switzer, to New Delhi from December 10-12.
- Crucial Discussions: The three-day talks were specifically aimed at finalizing the first phase of the Bilateral Trade Agreement (BTA)—a framework deal designed to quickly resolve the 50% punitive tariff currently imposed by the US on certain Indian goods. This tariff is composed of a 25%reciprocal tariff and an additional 25% penalty linked to India’s continued imports of Russian crude oil.
- Urgency for Exporters: The resolution of this tariff is vital, as data confirms India’s merchandise exports to the US declined for the second consecutive month in October, falling by 8.58%, largely due to the steep duties. Commerce Secretary Rajesh Agrawal had recently expressed optimism about achieving a framework trade deal this year to address this issue.
- The Goal: Both nations are working in parallel toward a comprehensive BTA aiming to more than double bilateral trade to $500 billion by 2030. The successful conclusion of this first tranche is seen as a necessary precursor to rebuilding confidence and accelerating the larger agreement.
2. 🌐 UNCTAD Reports Global Trade to Surpass $35 Trillion Record
Despite geopolitical headwinds and trade tensions, global commerce is set to hit an unprecedented milestone this year.
- Record Value: The UN Trade and Development (UNCTAD) released its Global Trade Update (December 2025), projecting that global trade in goods and services will exceed $\text{\$35}$ trillion for the first time in 2025—an increase of approximately 7% compared to 2024.
- Drivers of Growth:
- East Asia, Africa, and South–South Trade were identified as the strongest drivers of global gains, highlighting the growing resilience and diversification of trade among developing economies.
- Manufacturing, particularly the electronics sector (with 14% growth), was the main engine, largely supported by strong demand related to Artificial Intelligence (AI) and technology products.
- Slowing Momentum: UNCTAD confirmed that while the value is record-breaking, the pace of growth slowed in the third and fourth quarters. Goods trade growth is expected to slow to 0.5% in Q4, while services growth is forecast at 2%. This deceleration is mainly due to heightened geopolitical tensions, higher costs, and uneven global demand, supporting the WTO’s earlier caution about the 2026 outlook.
3. 🇬🇧 India-UK FTA Momentum & Sectoral Boost
Progress on the India-UK trade front continued to show positive momentum, reflecting the Comprehensive Economic and Trade Agreement (CETA) signed in July 2025.
- UK Firms Expansion: A new report indicated that UK firms are significantly boosting their presence in India, with turnover hitting ₹5,693 billion (approx. $63 billion), capitalizing on the growth unlocked by the FTA.
- Key Sectors: The agreement provides immediate duty-free access for Indian labor-intensive sectors like textiles, leather, and gems. This strong performance reinforces the value of secured trade agreements in driving specific sectoral export growth.
4. 🌾 Trade Tensions Roil Agricultural Markets
While manufacturing trade grew, the agricultural sector felt the full brunt of intensified trade disputes and escalating tariffs.
- Volatility and Uncertainty: The resurgence of protectionist policies between the US, China, the EU, Canada, and Mexico has led to significant volatility in agricultural commodity prices (e.g., soybeans and corn).
- Supply Chain Realignment: Importing nations are actively seeking alternative suppliers, forcing exporting countries to scramble to find new destinations for their produce. This market realignment affects logistics, processing, and consumer prices, creating a complex trading environment for food commodity exporters.
Source : www.thehindu.com
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