How Do Geopolitical Tensions Affect International Trade?

Geopolitical risks refer to uncertainties arising from political, military, and strategic tensions among states, regions, and global actors. These risks are typically driven by factors such as wars and armed conflicts, diplomatic crises, economic sanctions, border and sovereignty disputes, competition over energy and natural resources, terrorism, and global rivalry among major powers.

In recent years, the United States’ more active use of military and economic instruments both in the context of great power competition with China and Russia and in regional crises involving Venezuela and Iran has contributed to the escalation of tensions in international relations. Moreover, the Russia–Ukraine conflict has emerged as one of the principal arenas of great power rivalry between the West and Russia, turning Ukraine into both a regional conflict zone and a focal point of global risk. The Israel–Palestine war directly threatens stability in the Middle East, generating global repercussions in areas such as regional security, energy supply, and migration; this, in turn, increases diplomatic and military interventions by the United States and other major powers. At the same time, Syria constitutes another center of geopolitical tensions as a complex arena where regional actors compete for influence and where the process of reconstruction continues. As European and other actors seek to protect their strategic interests, multilateral diplomacy is becoming increasingly strained.

The rise in geopolitical risks deepens uncertainties in the global trade and security environment. These developments significantly affect the global trading system in terms of both short-term trade flows and long-term structural dynamics. Wars, sanctions, diplomatic crises, and strategic rivalry among major powers lead to disruptions in trade routes, the restructuring of global supply chains, and increases in transportation and production costs. In this process, states increasingly prioritize national security and strategic autonomy concerns, shaping trade policies within a more protectionist and selective framework, and resorting more frequently to instruments such as export controls, tariffs, and technology restrictions. Consequently, the global trading system is moving away from a model of efficiency-based globalization toward a more regionalized and bloc-oriented structure, while the heightened uncertainty environment contributes to a slowdown in international investment and to the deepening vulnerabilities of developing economies in particular.