The future of trade lies in connectivity, not tariffs

Stock markets rallied after proposed tariffs on US, Canadian and Mexican goods were suspended, revealing how the global economy values co-operation over conflict. Bloomberg

Trade is part and parcel of the Middle East’s history. Long before the Americas were discovered by Europeans at the end of the 15th century, this region was the beating heart of the Silk Road between East and West. The Arabian Gulf and Red Sea then, as now, were important commercial routes that connected different peoples and cultures, highlighting the centrality of this part of the world to global trade.

The value placed on such connectivity was highlighted once more this week in the UAE. On Monday, Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai, announced the launch of the Emirates Council for Logistics Integration. This new body will be responsible for driving UAE trade around the world by bolstering integration in roads, rail, ports and customs. The country wants to strengthen its position as a leading hub for global trade and has set an ambitious target of raising the value of its logistics sector to Dh200 billion ($54.45 billion) annually within the next seven years.

Many individual economies value such improved trade links and are working to increase them. In September 2023, for example, world leaders attending a G20 summit in New Delhi unveiled plans for an India-Middle East-Europe Economic Corridor, or Imec. The UAE joined governments including Saudi Arabia, the EU – and the US – in signing a deal to work on connecting Indian ports with the Middle East and Europe.

Canada and Mexico hit back after Trump imposes heavy tariffs

00:59

By removing bureaucratic and fiscal impediments to trade, and connecting countries’ economies by road, rail, sea and air, all sides have more opportunities for prosperity. The future of 21st century global trade is to be found in such connectivity, the normalising of doing business between different regions and working in co-operation with emerging markets.

However, such ambitions are a bright spot against the background of a turbulent period for international trade. High-profile developments this week regarding trade tariffs make it apparent how doing business across borders can fall victim to political divisions and diplomatic rivalries. A brewing trade war between the US – the world’s biggest economy – Canada and Mexico has been narrowly averted, for now, after all sides agreed to pause planned tariffs on each other’s goods for one month. Despite this temporary reprieve, Washington’s heavy-handed policy towards two of its closest trade partners and neighbours threatens to leave much lingering suspicion and mistrust.

Such upheaval in the global economy may offer opportunities to some, but it goes against the spirit of productive trade relationships that have connected and enriched different parts of the world for centuries

Economic nationalism of this kind runs counter to globalisation – a phenomenon largely based on the post-war economic and political model championed by the US. The fact that stock markets this week rallied so dramatically after the proposed tariffs were suspended reveals how the global economy values co-operation over conflict.

Meanwhile, China – the third target of American tariffs – has hit back with levies of its own. On Monday, China's UN ambassador Fu Cong also confirmed that Beijing had filed a complaint with the World Trade Organisation, claiming the US was in breach of its rules. Such upheaval in the global economy may offer opportunities to some, but it goes against the spirit of productive trade relationships that have connected and enriched different parts of the world for centuries.