By Shishir Priyadarshi
For much of the last seven decades, global commerce has been a stabilizing force. It linked economies, created jobs, spurred innovation, and lifted over a billion people out of poverty. For businesses, trade provided predictability – a rules-based system anchored in transparency and fairness.
Today, that world feels like a distant memory. We are living through a transformation where trade is no longer seen merely as an engine of growth but increasingly as a weapon of statecraft. Tariffs are being deployed not just to protect domestic industries, but to punish rivals. Export controls are justified not only on national security grounds but to contain technological competitors. Even the foundational principles of the multilateral trading system – binding commitments, Most-Favoured-Nation treatment – are being disregarded with little hesitation.
The predictable, rules-based trading order painstakingly constructed under the World Trade Organization (WTO) is under siege. The shift is profound and structural. What once bound countries together is now a potential lever of coercion. Global supply chains – celebrated for their efficiency – are being recast as strategic vulnerabilities.
Weaponization of interdependence
The reliance on single suppliers for critical inputs like semiconductors, rare earths, or pharmaceuticals is viewed as a risk to national security.
This “weaponization of interdependence” is not limited to any one region or rivalry. While the US-China trade tensions dominate headlines, similar trends are visible in restrictions on energy flows, controls over agricultural exports, and disputes over critical minerals. The signs are already there and worrying signs, to say the least.
The WTO had projected a healthy 2.7% growth in global trade for 2025. But reality diverged sharply: a wave of tariffs now portends a 0.2% drop in trade volume—potentially worsening to a 1.5% decline if uncertainty pervades markets.
The business imperative
For businesses, this means exposure to sudden, politically-driven disruptions. Contracts can be invalidated by a policy shift. Investments can be stranded by sanctions. Markets can be closed overnight with a simple administrative order.
How should business respond?
The instinctive reaction might be to retreat – to localize operations, reduce cross-border exposure, and wait for the storm to pass. But that is neither practical nor desirable. In today’s fractured order, resilience is no longer a hedge - it is the strategy.
Global trade, even in its current turbulent state, remains indispensable. It accounts for over half of global GDP, drives technological diffusion, and provides resilience against domestic shocks. In an interconnected world, autarky is not a viable option.
Adaptation means recognizing that geopolitics is now a core business risk. Companies must diversify their supply chains, incorporate political risk into investment decisions, and build resilience into operations – from strategic stockpiling to flexible sourcing.
Engagement means using the voice of business to advocate for stability. Industry groups, chambers of commerce, and cross-border business coalitions can make a compelling case that protectionism ultimately harms jobs, raises consumer costs, and stifles innovation. Businesses can be powerful ambassadors for the idea that economic interdependence, managed wisely, remains a better alternative than economic fragmentation.
The role of governments
Governments have an equally critical role. They cannot leave the private sector to navigate these crosscurrents alone. Nor can they afford to abandon the rules-based system altogether – doing so would harm even the most powerful economies.
Three priorities stand out:
First, defend and reform the multilateral system. The WTO may be flawed, but it remains the only institution capable of providing a common rulebook for global trade. Restoring a functional dispute settlement system should be a starting point.
Second, integrate economic and security strategies. Trade policy can no longer be crafted in isolation from foreign policy. Structured dialogues with key partners, especially on trade-security linkages, can prevent misunderstandings from spiralling into crises.
Third, ensure domestic policy predictability. Investors value clarity above all. Frequent changes in tariffs, opaque regulatory processes, or ad hoc restrictions erode credibility and deter investment.
India’s trusted trade moment
For India, the current flux presents a once-in-a-generation opportunity. As companies look to diversify supply chains away from overdependence on a few hubs, India has the potential to emerge as a trusted partner. But potential is not enough. Trust, once earned, could make India the hinge between fragmented markets and a more stable globalization. It must be backed by action: world-class infrastructure, predictable policies, competitive tax regimes, and a demonstrated commitment to honoring international commitments. If India can deliver on these fronts, it will not only attract investment but also shape the future contours of global commerce.
A new compact for trade - Pragmatic globalization
The world cannot return to the “golden age” of globalization. The political, technological, and security realities of today demand a different approach. What we need is pragmatic globalization – open where possible, secure where necessary, and cooperative where essential. It will require compromise, innovation, and above all, political courage.
Commerce without conflict is not a naïve aspiration; it is a practical necessity. A world where trade becomes just another theatre of conflict is a world of slower growth, stunted innovation, and perpetual mistrust. A world where trade remains a force for connection – even amidst competition – is one where prosperity and peace still have a chance.
The choice is not abstract. It is here, now, and urgent.
(Shishir Priyadarshi is President, Chintan Research Foundation, and was Director, WTO.)
Views are personal and do not represent the stand of this organisation.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
