Global Trade Patterns Shift at Davos as World Adjusts to U.S. Tariff Policies

By Benadeta Mwaura - Reporter

Switzerland, 22 January 2026 - Global economic and trade leaders meeting at the World Economic Forum in Davos Switzerland signalled that the world is reconfiguring trade relationships in response to changes in U.S. tariff policy, which have reignited debates about trade blocs and market diversification among major economies.

At the forum, discussions focused on the effects of recent U.S. tariff threats, although a widely publicised proposal to impose punitive tariffs on European allies was dialled back after diplomatic pushback, and how nations are moving to reduce reliance on U.S. markets and build new supply-chain partnerships with alternative hubs.

Canadian Finance Minister François-Philippe Champagne said that the speed and scale of changes in trade policy are reshaping global supply lines, prompting exporters and importers to diversify beyond the United States.

The World Trade Organisation’s director-general also supported moves toward diversified trade as a means of strengthening global economic resilience.

Strategic consulting firm Boston Consulting Group forecasts that the U.S. share of global goods trade could shrink over the coming decade, while other trade nodes, including China, BRICS+ economies, and so-called “plurilateral” partners from Europe, Asia and North America, gain prominence.

What This Means for Africa’s Trade Landscape

1. Shifts in Trade Partnerships Could Open New Opportunities

As traditional trade flows recalibrate, African countries may find new markets outside the traditional U.S. and European circuits, particularly with partners in Asia, the Middle East and intra-regional trade networks. For example, Chinese trade with African markets has been steadily growing, projected to exceed $200 billion in 2025 as nations deepen economic links amid persistent tariff pressures from the U.S. administration.

Diversification could benefit exporters of raw materials, minerals, agricultural products, and manufactured goods if African economies can leverage regional trade agreements like AfCFTA, and pivot toward demand in fast-growing Asian and Middle Eastern markets.

2. U.S. Tariff Policies Pose Direct and Indirect Risks

African economies are not immune to U.S. tariff impacts. Under recently expanded reciprocal tariff policies stemming from the Trump administration’s trade stance, many African products face duties of 10 – 30 percent on U.S. imports, and in some cases much higher, which can weaken competitiveness in the American market.

Economists warn that this could lead to production cuts and job losses in sectors exposed to U.S. trade if demand contracts significantly.

Countries such as South Africa have already signalled significant pressures due to high tariff rates on vehicles, metals and other exports, risking job losses in key industrial sectors and slowing economic growth.

3. Effects on Kenya’s Trade and Economy

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The effects can also be felt significantly in kenya:

Export Competitiveness: Kenya’s exports to the U.S., particularly under the African Growth and Opportunity Act (AGOA), include textiles, apparel, and agricultural products. Recent tariff shifts and uncertainty around AGOA renewal have raised concerns among local manufacturers who depend on stable duty-free access.

Market Diversification Pressure: As U.S. trade policies change, Kenyan exporters may accelerate efforts to diversify into regional markets (EAC, COMESA, AfCFTA) as well as Asia and the Middle East to offset volatility in Western markets.

Investment and Supply Chains: Changes in major trade flows can influence foreign direct investment (FDI) and supply-chain decisions.

Kenya’s strategy to attract investors in manufacturing, agro-processing and tech may hinge on how well it positions itself within emerging blocs, such as those centred around China, BRICS+ or plurilateral alliances highlighted in Davos.

Export Value Chains: Kenyan exporters that rely on imported inputs (machinery, steel, chemical inputs) could face higher input costs if global tariff pressures raise import prices, affecting profit margins and competitiveness.

4. Broader Global Trade Uncertainty Still a Factor

Economic forums like Davos have highlighted that tariff uncertainty itself, even more than the tariffs, can weigh on global trade volumes and investment decisions.

The World Trade Organization has previously forecast that expanded tariff uncertainty could slow global merchandise trade and dampen demand in key sectors, underlining risks that spill over into emerging economies like Kenya.

Africa’s reliance on traditional Western markets and raw commodity exports makes it vulnerable to external policy shocks, reinforcing the need for deeper regional value chains and intra-African trade.

Strengthening trade ties with Asia, Middle East and plurilateral partners could open alternative pathways for growth and investment, while higher global tariffs on raw materials and inputs can raise costs for Kenyan industries unless mitigated by trade facilitation and supply chain efficiency.