How 2025 Conflicts Are Disrupting Global Trade

This article is Part 2 of a two-part series exploring how geopolitical tensions shape the commodity markets, historically and in the present day.

In Part 1 of this series, we explored the historical events that reshaped global commodity flows. Now, we turn to the present, where new tensions are once again redefining trade rules.

The 2025 U.S.–China Trade War and Its Global Commodity Impact

In 2025, the re-escalation of trade tensions between the United States and China sent shockwaves through global commodity markets. U.S. President Donald Trump introduced sweeping tariffs under a new protectionist agenda called “Liberation Day,” applying a universal baseline tariff to all imports and raising duties up to 145% on Chinese goods. China responded with its levies, reaching 125% on key U.S. exports. The result was a sudden disruption in trade flows, rising input costs, and mounting pressure across sectors like energy, metals, and agriculture.

However, last week, after high-level talks in Switzerland, both countries agreed to a temporary de-escalation. Beginning May 14, they will reduce reciprocal tariffs by 115% for a 90-day period. U.S. duties on Chinese imports will drop to 30%, while China’s tariffs on U.S. goods will fall to 10%. Most retaliatory measures have been suspended. Though the deal was welcomed by markets and led to a surge in shipping and equities, it remains temporary. Uncertainty persists, especially as the U.S. retained an additional 20% component focused on China’s role in fentanyl trafficking.

Global Economic Repercussions

The International Monetary Fund (IMF) has downgraded its global growth forecast for 2025 to 2.8%, a significant reduction from the previous 3.3% projection. The IMF attributes this slowdown to the heightened trade tensions and the resulting policy uncertainty, which have dampened investment and disrupted supply chains worldwide.

Shift in Agricultural Trade Flows

The agricultural sector has been particularly affected. China, traditionally a major importer of U.S. soybeans, has significantly reduced its purchases in response to the tariffs. Instead, China has turned to Brazil, with Brazilian soybean exports to China surging. In April 2025 alone, approximately 40 Brazilian soybean ships docked at China’s Zhoushan port, marking a 48% year-on-year increase. This shift impacts U.S. farmers and alters global trade dynamics, benefiting Brazilian agriculture.

The tariff reduction may temporarily reopen opportunities for U.S. agricultural exports, but the long-term impact remains unclear. China’s diversification strategy is well underway, and Brazilian producers continue to benefit from stronger trade ties and reduced dependency on U.S. supply chains.

Pressure on Industrial Supply Chains

Beyond agriculture, industrial sectors have also faced major disruption. Tariffs on Chinese electronics machinery and raw materials raised costs for U.S. manufacturers, particularly in the automotive, construction, and clean energy sectors. At the same time, China’s export controls on rare earth elements and battery-grade lithium disrupted global supply chains in tech and electric vehicles.

Although the new agreement offers partial relief, many companies are taking a cautious stance. With residual tariffs still in place and politically sensitive measures left untouched, most manufacturers are maintaining alternative sourcing strategies in Australia, Southeast Asia, and Africa. The uncertainty surrounding long-term trade stability continues to shape procurement decisions and investment planning.

Instability in the Middle East

The Middle East remains a focal point of geopolitical tension, significantly impacting global energy markets. The Strait of Hormuz, a critical chokepoint through which approximately 21% of the world’s oil passes, has been a particular area of concern.  

In early 2025, heightened tensions involving Iran and regional powers led to a series of drone attacks on infrastructure in the Gulf, resulting in temporary shutdowns of refining capacities. These events caused Brent crude prices to surge [past $105 per barrel](https://www.reuters.com/business/energy/oil-rises-us-says-russian-attack-ukraine-may-occur-soon-2022-02-24/#:~:text=NEW%20YORK%2C%20Feb%2024%20(Reuters,disruptions%20to%20global%20energy%20supply.), underscoring the market’s sensitivity to Middle Eastern geopolitical developments.

Moreover, the U.S. has intensified its military operations in the region, particularly targeting Yemen’s Houthi rebels in response to their assaults on shipping lanes. These actions have further contributed to the volatility of oil prices, reflecting the intricate interplay between geopolitical events and energy markets.

Russia–Ukraine Conflict

Entering its third year, the Russia–Ukraine war continues to disrupt critical commodity flows, particularly in the agricultural sector. Ukraine, a major global exporter of wheat, corn, and sunflower oil, has faced significant challenges in maintaining steady shipment volumes due to damaged port infrastructure, mined transport routes, and intermittent blockades in the Black Sea.

The conflict has led to a 34% decrease in Ukraine’s overall grain production compared to the 2021–22 levels, with projections indicating further declines due to adverse planting conditions. Despite these challenges, Ukraine has managed to continue exporting a significant proportion of its crops, although its global market share, particularly in corn and wheat, is diminishing. 

Additionally, sanctions on Russian natural gas and fertilizers have reshaped energy and agricultural input markets in Europe, North Africa, and parts of Asia. These sanctions have driven increased volatility across multiple sectors, with ripple effects extending from fertilizer affordability for farmers in Brazil to energy security policies in Germany.

Why Risk Management Must Be Proactive

In an environment shaped by global tensions, commodity traders cannot afford to treat risk as a downstream concern. A proactive strategy is essential to protect margins, ensure continuity, and build resilience.

Key components of strategic risk management include:

• Diversification across products, regions, and suppliers.
• Hedging strategies to manage exposure to price volatility.
• Real-time insights for monitoring risk signals across markets.
• Operational resilience through more agile and distributed supply chains.

These are necessities for businesses operating at the intersection of commodities and geopolitics.

Final Thoughts

History has shown that geopolitical shocks are not the exception — they are a recurring feature of the global commodity landscape. Building long-term resilience starts with treating risk as a core function of business strategy, not just a response to crisis.

Hermes CTRM gives commodity businesses the visibility and control they need to manage risk strategically. Get in touch to learn how our solutions can support your operations.