World Trade Organisation flags a 7% long-run global GDP drag from U.S.-China trade fragmentation as rare-earths export controls, elevated tariff schedules and a push to restore dispute settlement recast supply chains, intensify developing-country welfare pressures and force institutional investors to prioritise scenario analysis, geographic diversification and portfolio resilience over the next four quarters.

SINGAPORE, SG / ACCESS Newswire / October 29, 2025 / With the World Trade Organisation sharpening scenario work on U.S.-China trade fragmentation and signalling a long-run hit to global output, Burghley Capital positions the latest projections squarely in the current quarter's risk calculus, setting out how allocators can read the next phase of tariff policy, supply chain rerouting and institutional reform while the window for constructive dialogue remains open and market liquidity remains sensitive to headline risk.

WTO modelling frames a severe downside in which persistent fragmentation between the world's two largest economies subtracts 7% from global real GDP over a long-run horizon defined by the organisation's scenario work, an effect described as systemic rather than cyclical and one that particularly exposes developing countries to double-digit welfare losses through trade, investment and remittance channels. As institutional portfolios absorb those signals, "strategic portfolio construction requires enhanced geographic diversification and sectoral precision," according to James Barker, Director of Private Equity at Burghley Capital Pte. Ltd., who argues that policy-driven shocks now warrant a more granular treatment of correlation and liquidity risk across public and private holdings.

Forecast tables released by the organisation depict a two-speed outlook, with the projection for the current calendar year set at 2.4% for global merchandise trade volumes while growth for the subsequent year is pared back to 0.5%, a divergence that speaks to front-loaded activity and inventory management at the same time as structural adjustments progress through logistics and capital-expenditure plans. In Barker's view, "headline stability masks a quieter rewiring of supply chains and financing flows," and the investment implication is that exposures tied to intermediate goods, logistics and power-intensive manufacturing deserve closer scenario testing over the next four quarters.

Policy actions intensify the market backdrop as the month unfolds. China expands export controls on rare earth metals on 9 October, a move that matters for advanced manufacturing given the country's share of roughly 70% in production and more than 90% in refining capacity, while the United States responds with additional 100% tariffs that trigger a pronounced risk-off session, with the Dow Jones industrial average down by nearly 900 points and the S&P 500 lower by 2.7% during the immediate trading day that follows. Average applied tariffs on Chinese exports into the United States sit near 57.6% as of early October, with reciprocal duties on U.S. exports into China near 32.6%, and Barker notes that "the spread of tariff schedules across supply chains now behaves like a rolling shock," so allocators benefit from scenario trees, decision gates and contingent hedges rather than single-point forecasts.

The negotiating cycle continues to swing between escalation and accommodation; the Phase One framework still serves as a reference point in which the U.S. purchase commitment of $221.4 billion covering 2020 to 2021 remains a contested metric, Geneva talks in May temper some proposed duty increases to bands between 10% and 30%, and the current quarter features hardening rhetoric around semiconductors and critical minerals. Burghley Capital underscores that these dynamics cut in multiple directions for portfolios: higher working capital needs for inventories, more complex vendor qualification for regulated inputs and wider dispersion in margin outcomes across technology hardware and industrials all surface in the data that asset owners evaluate through investment committee cycles.

Trade momentum also contends with cost pass-throughs that corporates disclose in filings, where reported tariff-related line items exceed $38.7 billion over the preceding 12-month period across a cross-section of manufacturing and technology issuers, pointing to a margin compression story that interacts with pricing power and demand elasticity by sector. "Resilience is no longer just physical redundancy or multi-sourcing," Barker observes, "it is balance-sheet architecture that can carry longer cash conversion cycles and revenue contracts that share risk more fairly across tiers of the chain."

Institutional reform at the WTO forms the third leg of the narrative, with dispute-settlement restoration continuing as a central objective and the original benchmark set for completion by 2024 still guiding the programme as technical work advances, while digital trade rules and environmental frameworks move higher on the agenda through structured discussions designed to keep services liberalisation and sustainability in view. The consequence for investment planning, Barker argues, is that "a functioning dispute system reduces the policy-error tail risk that markets are pricing into valuations," which can stabilise cross-border capital allocation even as security-driven trade controls evolve.

The balance of risks and opportunities therefore hinges on two practical considerations that allocators can execute within current governance cycles. First, exposures that benefit from re-routing, including near-shoring of selected manufacturing nodes and logistics nodes tied to energy transition infrastructure, warrant pipelines that connect directly to realistic permitting, grid and labour constraints over the next 12 to 24 months. Second, cash-flow forecasting should incorporate tariff bands and export-control scenarios that map onto real supplier lists, rather than generic factors. As Barker puts it, "portfolio clarity improves when the trade map is built asset by asset, contract by contract, jurisdiction by jurisdiction."

Burghley Capital contributes analysis that connects WTO scenario work to investable signals, linking trade forecasts and policy tracks to valuation, rate-sensitivity and cash-flow dispersion across listed equities, private companies and credit instruments, with an emphasis on how technology supply chains, advanced manufacturing and critical-mineral ecosystems transmit shocks into earnings and enterprise value.

About Burghley Capital
Founded in 2017, Burghley Capital Pte. Ltd., UEN 201731389D, is a global investment management firm headquartered in Singapore with deep expertise in long-only strategies. The firm provides disciplined market insight, tailored investment approaches and dedicated advisory solutions designed to deliver durable performance and financial resilience. Clients include leading institutions and private investors worldwide. Further resources are available at https://burghleycapital.com/resources. Media enquiries should be directed to Martin Wei at m.wei@burghleycapital.com or via https://burghleycapital.com.

SOURCE: Burghley Capital