GENEVA, Switzerland – The World Trade Organization cautioned on Wednesday that global trade might sharply decline this year due to President Donald Trump’s aggressive imposition of tariffs. This situation has created uncertainties leading to “significant adverse effects” worldwide.
After resuming his term, Trump introduced a 10 percent tax on products coming from various countries globally as well as implemented 25 percent duties on steel, aluminum, and vehicles.
Although Trump reversed his stance on higher tariffs for numerous nations, he intensified a trade conflict with China by imposing 145 percent duties on Chinese imports. In response, Beijing hit back with a 125 percent tariff on American goods.
“The situation is quite alarming,” stated WTO head Ngozi Okonjo-Iweala to journalists, noting that the organization anticipated trade volumes between the United States and China plummeting by an enormous 81 percent.
She cautioned in a statement that persistent uncertainty has the potential to hinder global growth significantly, leading to harsh adverse effects worldwide, particularly for the most susceptible economies.
At the beginning of the year, the WTO anticipated an expansion in worldwide trade for both 2025 and 2026. They predicted that goods trade would increase alongside global GDP, while service sector trade was forecasted to grow at an even quicker pace.
However, according to the organization’s yearly global trade forecast released on Wednesday, it was found that under current conditions, international goods trade is expected to decline by 0.2% this year before experiencing a slight rebound of 2.5% in 2026.
The figure for 2025, determined based on the tariff conditions as of April 14, is almost three percentage points lower compared to expectations had there been no tariffs imposed by Trump on various nations worldwide.
‘Severe downside risk’
The WTO cautioned that significant downward risks might cause trade to contract even more substantially, potentially declining to as low as 1.5 percent in 2025 should conditions worsen.
The WTO similarly warned that although services trade isn’t directly impacted by tariffs, it too “is anticipated to face negative effects.”
The worldwide volume of commercial services trade is currently predicted to increase by 4.0 percent–approximately one percentage point lower than initially anticipated.
The WTO stated that this year, the effects of the tariffs were anticipated to vary significantly across different areas.
According to the organization, “Given the present policy environment, North America is anticipated to experience a 12.6 percent decrease in exports and a 9.6 percent reduction in imports for the year 2025.”
It highlighted that the area’s performance would reduce global merchandise trade growth by 1.7 percentage points in 2025, making the total figure negative.
Asia was expected to see “gentle expansion,” where both exports and imports were anticipated to increase by 1.6 percent.
Specifically, Chinese goods exports were predicted to increase by 4% to 9% in every region apart from North America, as per the WTO statement, due to diverted trade routes.
Moreover, European exports were expected to increase by one percent, whereas imports were projected to rise by 1.9 percent.
‘Decoupling’
The WTO stated that their economic experts anticipate a growth of 2.2 percent in global gross domestic product (GDP) for this year, with an expected increase to 2.4 percent in 2026.
The organization stated that it anticipated retaliatory tariffs would have just a “minimal” direct effect on that number.
However, Okonjo-Iweala informed journalists that the “significant anticipated decrease in U.S.-China two-way commerce” could lead to even “broader repercussions.”
Even though US-China trade makes up roughly three percent of global merchandise exchange, she cautioned that the continuing “separation of these two economies” might result in “the wider disintegration of the worldwide economic system into two distinct blocs divided along geopolitical faultlines.”
According to our projections, “global GDP could decrease by approximately seven percent in the long run,” she stated, referring to the year 2040.
This is rather considerable and meaningful.
In response to this crisis, Okonjo-Iweala advocated for reforms and encouraged nations to infuse new energy into the WTO.
Specifically, she urged the organization, which operates solely via consensus—a painfully gradual procedure—to “improve decision-making efficiency and adjust our accords to more effectively address current global challenges.”
We ought not squander this crisis.