There are several emerging trends in international trade and investment. First, there are ongoing trends of fragmentation of trade and reorganization of geopolitics. The growing US-China, US-Canada, and US-Mexico trade war is compelling trade diversification and regionalisation. The “China+1” approach is compelling the multinationals to divert the production to other destinations, including Southeast Asia, India, and Mexico. Increased focus on friend-shoring and nearshoring—when nations focus more on investment and trade with politically aligned partners—is driving trade fragmentation even more. Increased regional trade agreements, including the Regional Comprehensive Economic Partnership (RCEP), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the African Continental Free Trade Area (AfCFTA), are transforming trade flows.
Second, protectionism is increasing because governments are using tariffs, non-tariff measures, and trade restrictions to protect domestic industries. Sanctions, export controls, and screening of investments are increasingly being utilized in strategic sectors like semiconductors and strategic minerals. The trend from globalization to regionalization is also increasing localized production trends. Recently, U.S. President Donald Trump once again stirred the global trade landscape with his unveiling of plans to impose “reciprocal tariffs” on America’s trading partners. This signals a new phase of economic protectionism that could have wide-ranging consequences. While the move is primarily targeted at China, other major economies, including the European Union, India, and Mexico, and many other developing countries are also likely to face trade pressures. Such tariffs could escalate trade disputes, leading to retaliatory measures that might further strain international economic relations.
Third, supply chains are changing. Companies are embracing automation, artificial intelligence, and robotics to make them leaner and less dependent on traditional labour-intensive production centres. Concerns around sustainability are also the driving force for ethical supply chains and circular economy structures.
Fourth, the emerging economies of India, ASEAN, Latin America, and Africa are becoming increasingly significant as a source of investment as well as trade. South-South trade is also on the upswing, with burgeoning intra-regional trade in Asia and Africa. Global development finance institutions such as the Asian Infrastructure Investment Bank (AIIB) and BRICS Bank are increasingly making global investments.
Fifth, the ongoing digital platform growth is transforming cross-border business, and access to foreign markets is within reach of SMEs. More rapidly growing digital payments, blockchain trade finance, and AI-driven logistics are transforming global business efficiency.
Sixth, while sustainability is informing trade policy, policy interventions such as the EU’s Carbon Border Adjustment Mechanism (CBAM) are pushing firms toward low-carbon production practices. Green finance and ESG-friendly investment are guiding FDI choices, and renewable energy trade in solar, wind, and hydrogen is reconfiguring energy geopolitics worldwide.
Finally, FDI is shifting away from traditional industries such as fossil fuels to digital, green, and high-tech industries. Sovereign wealth funds, impact investing, and venture capital are increasingly playing a role in funding emerging markets. State intervention in trade and investment is also on the rise, as seen in the US Inflation Reduction Act, which provides huge subsidies to strategic industries.
Questions may arise about whether there is any antidote to turn these trends around. Though full reversal is not possible, certain strategic steps can minimize the dislocations. Reviving multilateralism by making international trade institutions like the WTO, G20, and regional economic blocs stronger can stabilize global trade. Also, deepened regional and bilateral free trade agreements can create more balanced trade flows and less reliance on speculative markets. Third, technological diplomacy through collaboration on AI, digital trade, and semiconductors can end trade fragmentation in priority sectors. Besides, strategic supply chain coordination of major minerals, vaccine security, and food supply chains can bring stability. Lastly, private sector adaptability by adopting dual sourcing, regional hubs, and AI-driven supply chain management will be essential for businesses to build resilience. By taking these strategic actions, Bangladesh will be able to ride the turbulent global trends more successfully and improve its economic resilience.
In its effort to ride these turbulent world waves, Bangladesh needs a vision-oriented trade and investment policy. The country needs to diversify its exports and export market from its long-time partners like the US and EU to newer markets in ASEAN, Latin America, and Africa. This is to prevent over-dependence on narrow markets.
Also, Bangladesh needs to support regional integration through joining dynamic forums such as RCEP and BIMSTEC. Regional arrangements could offer new market access to export markets as well as a means of economic cooperation.
Moreover, green industry development and adherence to ESG standards are the other important measures through which Bangladesh can guarantee that it has ongoing access to export markets increasingly focusing on environment and social governance.
Furthermore, investment in e-commerce infrastructure is also required to facilitate cross-border e-commerce. Industrial policy improvements to attract high-tech and impact investment will also enrich the country’s economic portfolio.
Finally, by acting ahead of any change in global trade and investment, Bangladesh can enhance its economic resilience and allow long-term growth in an increasingly fragmented world.
This article was first published in the April, 2025 edition of the Thinking Aloud
RECENT COMMENTS