Trade Finance Forum › Forums › Market Regulations › Risk Analysis › What effect has the current political situation had on trade financing and international commerce? How have shifts in the political situation impacted international trade, and what are the resulting opportunities and challenges? › Reply To: What effect has the current political situation had on trade financing and international commerce? How have shifts in the political situation impacted international trade, and what are the resulting opportunities and challenges?
Political instability in recent years has had a major effect on the availability of trade financing and international commerce more generally. The United States and China, the world’s two largest economies, have been engaged in a trade battle for several years, resulting in the imposition of tariffs on a wide variety of goods. Companies’ ability to compete in the global market has been hampered by the increased cost of doing business caused by tariffs and other trade barriers.
In addition to making it difficult for businesses to function, political unrest and conflicts in some regions can disrupt the flow of goods and services. Supply chain disruptions brought on by the recent COVID-19 pandemic have also had an impact on trade finance as well as international trade, prompting a concentrate on economic security and the development of more resilient supply chains. Generally speaking, the current political climate has made it harder for businesses to participate in international trade and trade finance by increasing uncertainty, costs, and other barriers to trade.