The Impact of Global Instability on International Trade

Abstract

From 2020 to the present, international trade has demonstrated a high level of volatility in terms of both its volume and direction. The positive effects of free trade agreements (CEFTA, ASEAN, USMCA, MERCOSUR, etc.) and the higher degree of globalization that characterized international trade resulted in increased levels of exchange and the liberalization of international markets at the beginning of the 21st century. However, since 2020, international trade flows have successively faced a series of instabilities, starting with COVID-19 and extending to wars in the Middle East, as well as new protectionist measures introduced by the United States primarily aimed at reducing the trade deficit with China. U.S. tariff revenues reached 287 billion dollars in 2025; this 192% increase compared to the previous year clearly illustrates the significance of these barriers for global trade, particularly considering that such protectionist measures are almost always followed by countermeasures. Health crises and war conflicts during this period have led to the closure of ports, waterways, airports, and airspace. Political crises have resulted in violations of WTO principles (e.g. the principles of non-discrimination and national treatment), as well as the formation and strengthening of global blocs (BRICS, the new “Board of Peace,” etc.). All these instabilities negatively affect the free movement of goods and services, resulting in a decline in trade activities and higher procurement costs for final products, as well as for energy and other resources. The objective of this paper is to determine the ways in which instability affects the volume of international trade activities, with particular reference to how these instabilities have influenced Serbia’s trade exchange with its international partners. The primary data sources which will be consulted for this research include reports from organizations such as the UN, OECD, and Deloitte.