Trade Uncertainty Under Geopolitical Risks: A Cross-Country Analysis of Mechanisms and Heterogeneity

In recent years, geopolitical conflicts, economic sanctions, and strategic competition among major powers have continued to intensify, making geopolitical risk (GPR) an important external shock affecting global trade stability. However, existing studies mainly focus on trade policy uncertainty (TPU) or changes in trade flows, while systematic cross-country empirical evidence remains limited on whether and how GPR affects a country’s overall trade uncertainty (TU). To this end, this paper systematically examines important practical issues, including the mechanisms through which GPR affects TU, the moderating role of external openness, and cross-country heterogeneity. The results suggest that higher levels of GPR are associated with higher TU, potentially through increased economic policy uncertainty (EPU), reduced cross-border capital inflows, and greater exchange rate volatility. Further analysis indicates that higher levels of economic openness tend to mitigate the relationship between GPR and TU, whereas greater financial openness may amplify this uncertainty. Moreover, the relationship between GPR and TU varies across countries depending on their level of economic development, degree of regional integration, and industrial structure, with the association appearing particularly pronounced in developing countries, non-EU member states, and countries with more advanced industrial structures. These findings provide useful insights for maintaining the stable development of global trade and economic systems.