As the 90-day reprieve from the retaliatory tariffs imposed by the United States (US) nears its end in early July, nations are intensifying diplomatic efforts to resolve the matter. There is progress, such as the easing of tensions with China and the United Kingdom (UK); but tariffs and trade uncertainties persist, underscoring the urgency for a prompt resolution to mitigate potential disruptions to international trade flows.

The US government’s April 2 decisions generated uncertainty in global markets. The International Monetary Fund and the World Trade Organisation have lowered their forecasts for volume growth in global trade on the back of these measures - the former to 1.7% for 2025 from 3.8% in 2024 and the latter to 0.2% from 2.9%.

The GEP Global Supply Chain Volatility Index declined further in May, mainly on account of surplus capacity in Asia, particularly China. Supply chains in North America remained underutilised, primarily due to sluggishness in Mexico and Canada, with inventory exceeding the long-term average for the second  straight month. Additionally, global demand for raw materials has been lacklustre since April.

• Real gross domestic product in the United States contracted 0.2% in the first quarter of 2025, a reversal from the healthy 2.4% growth in the last quarter of 2024
• China's manufacturing Purchasing Managers’ Index contracted
• Global supply chains were underutilised and energy prices declined