Rising geopolitical tensions among economies creating a space for rising economic risks and driving down productivity and innovation for all. Since the past year tariffs are used as a trade weapon, the US has imposed duties on $360 billion worth of Chinese products, although China has set retaliatory tariffs on $110 billion of US goods. This not only affects the US-China trade relations but will also harm US businesses which have ties with Chinese firms. With the new tariff policies spread to other countries, the US has also imposed visa restrictions on immigrants sharing human capital and innovation ideas.
Greater risk and trade policy have disrupted the global supply chain, affected the Foreign Direct Investment (FDI) with small and medium enterprises along with multinational firms. As the World Trade Organization (WTO) is trying is to settle down trade disputes among countries, the business ability to plan and invest seems to be precarious with growing domestic dissatisfaction. To restore that global supply chain, global leaders should take initiative to increase international trade and as well as explore risk mitigation mechanisms lowering the multilateral tensions among economies. Trade is productive as well as address challenges associated with technology, innovation, and taxation. Measures should be taken and the consequences of economic fragmentation should not be underestimated.