Guardians of commerce

Global South countries have joined hands to resolutely uphold the multilateral trading system in the face of the US' attempts to impair it

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2025 was an extraordinary year. The tariff and trade wars launched by the United States have weaponized economic tools, posing severe challenges to the global economy. In the face of mounting difficulties and risks, countries of the Global South have further deepened South-South cooperation and firmly upheld the multilateral trading system, injecting stability and positive momentum into the world economy.

At the beginning of 2025, the new US administration repeatedly imposed unilateral tariffs. First, it levied sectoral tariffs based on domestic legislation, targeting industries such as steel and aluminum, automobiles and auto parts, copper products, and pharmaceuticals, with varying tariff rates. Second, under the pretext of fentanyl-related concerns, it imposed additional tariffs ranging from 10 percent to 25 percent on China, Canada and Mexico. Third, it imposed so-called reciprocal tariffs on most economies worldwide.

These unilateral US tariffs violated the core principles of the World Trade Organization and undermined the multilateral trading system. First, by applying discriminatory tariffs to different trading partners and unilaterally breaching its tariff-binding commitments, the US has openly violated the principles of most-favored-nation treatment and bound tariffs, directly shaking the foundations of the WTO-centered multilateral trading system. Second, preferential arrangements in tariff agreements reached between the US and certain countries are not extended to other members, and in some cases even include so-called poison pill clauses that harm the interests of third parties, contravening both multilateral trade principles and basic norms of international relations. Third, the US actions risk encouraging imitation by other WTO members, which, as indicated by the broken windows theory, will further weaken the authority of the WTO and the effectiveness of the multilateral trading system.

From a macro perspective, the unilateral US tariffs have dealt a blow to the global economy. The foundation of the post-pandemic global economic recovery remains fragile, and the imposition of wide-ranging tariffs has compounded existing vulnerabilities.

Unilateral tariffs have disrupted global industry and supply chains. On the one hand, tariffs force passive adjustments to global production and supply-chain structures due to artificial policy distortions, undermining efficiency. On the other hand, tariff pressures have pushed countries toward localized production, leading to a significant contraction of global supply chains. A clear manifestation of this trend is the sharp slowdown in global merchandise trade growth. According to the WTO's latest forecast, the global trade volume in goods is expected to grow by only 2.4 percent year-on-year in 2025, lower than the 2.7 percent annual growth rate in 2024.

From a micro perspective, unilateral US tariffs have heightened uncertainty for business operations. Data show that from January to November 2025, the average monthly US Trade Policy Uncertainty Index was nearly three times the level recorded in December 2024. Faced with such uncertainty, companies are often forced to sacrifice efficiency, resorting to diversification strategies, front-loading exports or imports, and building up inventories, all of which raise operating costs. Many companies face operational difficulties or declining profits due to misjudgments about tariff impacts or an inability to absorb additional costs. For example, General Motors reported in its second-quarter earnings that unilateral US tariffs resulted in losses of $1.1 billion, with net profit falling 32 percent year-on-year.

The shared commitment of Global South countries to defending the multilateral trading system has become a major force countering the impact of unilateral US tariffs and addressing global economic challenges.

Global South countries have resolutely upheld the multilateral trading system. First, they have openly opposed unilateral measures and worked to build broad international consensus. In July, China proactively placed the issue on the agenda of the WTO General Council and submitted a written proposal on supporting the multilateral trading system under the current situation, calling for opposition to unilateral tariff measures and joint efforts to safeguard the multilateral trading system — an initiative that received a positive response from many members. Second, Global South countries have assumed greater responsibility in advancing WTO reform. China's announcement that it would not seek new special and differential treatment in future negotiations at the WTO has been widely viewed as a major commitment to the multilateral trading system and a key step in promoting relevant reforms. Third, Global South countries have strengthened South-South cooperation in support of the development agenda. China has actively expanded unilateral opening-up measures, implemented zero-tariff treatment on 100 percent of tariff lines for products from 53 African countries with which it has diplomatic ties, and proposed the establishment of the informal platform "Geneva friends of South-South capacity building".

Global South countries have injected positive energy into the world economy. In recent years, they have contributed nearly 80 percent of global economic growth, with growth rates significantly higher than those of developed economies. They have also explored new growth drivers through cooperation in the digital and green economies. In 2025, BRICS countries listed the digital economy as a priority area under the Strategy for BRICS Economic Partnership 2025, covering fields such as 5G, 6G and artificial intelligence. The latest upgrade protocol for the free trade agreement between China and the Association of Southeast Asian Nations includes a dedicated chapter on the green economy, designating green trade as a priority area of cooperation. The Shanghai Cooperation Organization has strengthened collaboration in green development, supporting sustainable economic growth among its members.

Global South countries have worked to maintain the stability of global industry and supply chains. First, they have strengthened internal resilience and upgrading. BRICS countries released the BRICS Action Plan for Trade Development and Standards Cooperation Initiative (2025-26), reducing trade barriers through standards alignment. Second, they have built new regional cooperation networks. The China-ASEAN FTA 3.0 Upgrade Protocol also has a dedicated chapter on supply chain cooperation, reinforcing regional supply chains through trade liberalization. Third, they have expanded diversified global markets. Founding members of the Southern Common Market, such as Argentina and Brazil, have signed free trade agreements with members of the European Free Trade Association, including Norway and Switzerland.

Global South countries have provided greater certainty to support normal business operations. First, they have reduced reliance on the US market. African countries have accelerated the construction of the African Continental Free Trade Area, while China has proactively expanded economic and trade cooperation with the European Union, ASEAN and Belt and Road countries. Second, they have stimulated domestic demand through local brand promotion and demand-boosting initiatives, leveraging internal markets as stabilizing anchors. For example, South Africa has launched a domestic demand stimulus program in cooperation with retailers to expand sales of locally produced goods. Third, they have introduced business support plans and policies, including tax incentives, subsidies and special funds, to provide direct assistance to affected enterprises.

Liao Fan is a senior fellow and the director-general of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. Su Qingyi is a senior fellow and the director of the Department of International Trade at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. The authors contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.