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Increasing trade-restrictive measures spurred by geopolitical tensions have pushed the cost of doing business to a 10-year high, according to research by risk consultancy Verisk Maplecroft.

Maplecroft’s 2025 Political Risk Outlook finds governments have steadily increased their use of policy instruments detrimental to trade since the Covid-19 pandemic, based on data from Global Trade Alert’s harmful interventions tracker between 2018 and 2023.

Actions such as subsidies for products produced locally, tariff measures and export-related taxes or restrictions have increased the cost of doing business globally, particularly in developed Western nations, it finds.

“The rising tide of tit-for-tat trade measures between geopolitically diverse blocs is having an immediate impact on businesses at the local level, straining operations and competitiveness in domestic markets,” the report says.

The US, UK, South Korea and Japan are among the worst affected. All four have experienced significant increases in business cost-related risks in the period studied.

France and Germany, the EU’s two largest economies, have also experienced greater risks, as well as higher borrowing rates, putting additional strain on businesses operating in these countries.

Maplecroft calculates the cost of doing business using a range of factors, including wages, employer security contributions and tax rates, Reema Bhattacharya, head of Asia research at the firm tells GTR.

It assesses borrowing costs using both a benchmark of a country’s short-term interest rate relative to regional peers, as well as measures such as availability of SME financing, domestic credit to the private sector, and ease of access to financing through local equity markets.

The report also shows how the cost of trading across borders has changed, including costs associated with documentary trade and border compliance measures.

Of the worst-affected countries, only the US and Germany saw costs fall, while the UK had a significant increase in trade-associated costs.

The World Trade Organization has repeatedly called for world leaders to keep trade flows “open and predictable”, sounding the alarm over an acceleration of restrictive measures since 2020. Maplecroft report finds that the number of such restrictions grew from 3,100 in 2019 to around 5,100 in 2023.

A key driver behind this global wave of protectionism is the US-China trade war, which has seen a series of retaliatory measures from both sides, particularly since the US introduced tariffs on Chinese imports in 2018.

Those measures may have cost the global economy as much as US$2tn since then, according to Maplecroft’s analysis of estimates by the IMF, World Bank and OECD.

“These figures analyse the trade war’s impact on global GDP, trade volumes, new business investments and supply chain costs,” says Bhattacharya.

“It is important to note that these effects are still evolving, and the long-term consequences may continue to influence the global economy beyond 2024.

“Despite some governments’ efforts to ease the burden, consumers and companies are going to foot the bill for a substantial realignment of the global production and flow of goods and resources between countries.”

The re-election of Donald Trump is likely to further intensify this trend. He has said he plans to implement a 60% tariff on goods from China and 20% for the rest of the world, alongside a slew of other “America first” policies when he takes office in January.

However, this trend is not necessarily bad news for everyone, the report notes.

Mexico and Vietnam in particular have emerged as “connector” economies, benefitting from both the US and China seeking new and diversified trade partners. Since 2018, both have increased exports to the US and imports from China while also decreasing their business risk, as measured by Maplecroft.

Despite this, they remain relatively risky and suffer from “unique” challenges that may affect businesses setting up shop in the countries.

Mexico’s major economic centres consistently rank in the highest risk category of Maplecroft’s Crime Index, largely due to gang crime.

Vietnam, meanwhile, is one of the highest-risk countries worldwide for several labour rights concerns, and many of these indices are worsening, the index states. These include concerns related to human trafficking, modern slavery and forced labour, while progress on civil and political rights has stalled and remains below the global average.

The report predicts that although these connector economies may make the trade war less destructive, the shift towards trading in blocs will likely undermine global trade efficiency and further increase costs.