The World Trade Organization (WTO) has warned that global trade may fall this year due to the impact of United States President Donald Trump’s new tariffs on imported goods.
It added that “severe downside risks”, including reciprocal tariffs and political uncertainty, could lead to a sharper decline in global goods trade and potential long-term damage.
“The decline is expected to be particularly steep in North America,” the WTO said, forecasting trade to drop by more than a tenth in that region.
WTO Director-General Ngozi Okonjo-Iweala expressed concern over the ‘decoupling’ of the US and China, describing it as ‘a phenomenon that is really worrying to me’.
The WTO previously expected global goods trade to expand by 2.7% in 2025, but it now forecasts it will fall by 0.2%.
Despite the prediction of plunging trade with the US, the organization expects some regions will still see trade growth.
It said Asia and Europe were still projected to post modest growth in both exports and imports this year.
“The collective contribution to world trade growth of other regions would also remain positive,” the WTO report said.
For the first time, the report contains a forecast for services trade, which is when countries buy and sell services to each other instead of goods.
The WTO forecasts services trade to grow by 4% in 2025, which is around one percentage point less than expected.
Chief economist Ralph Ossa said: “Tariffs are a policy lever with wide-ranging, and often unintended consequences.
“Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity,” he added.
Also on Wednesday, the UN trade and development body, UNCTAD, released its report, which forecasts global growth to slow to 2.3% in 2025 due to escalating trade tensions and uncertainty.
It said the projection was below “the 2.5% threshold widely viewed as signalling a global recession”.
A baseline tariff of 10% on almost all foreign imports to the US kicked in on 5 April, although some countries and goods are exempt.
China has a much higher tariff, which now totals 145% on most goods.
The US stock market slid on opening on Wednesday, with the big indexes falling amid the ongoing uncertainty.
