Geneva, Switzerland – The World Trade Organization (WTO) has sharply downgraded its global trade outlook for 2025, citing escalating U.S. tariffs and mounting global uncertainty as major threats to international commerce.
In a report released Monday, the WTO projected a 0.2% decline in world merchandise trade volume for 2025 — a steep reversal from earlier forecasts and nearly three percentage points lower than trade would have been without the intensifying trade tensions.
The downgrade follows recent moves by former U.S. President Donald Trump, who, after returning to office, unveiled a sweeping set of “reciprocal import taxes” ranging from 10% to 50%. While the higher rates have been temporarily suspended for 90 days, a 10% baseline tariff has been imposed on nearly all imports, with Chinese goods facing duties exceeding 100%.
The WTO warned that if the full scope of the proposed tariffs is implemented, global trade could contract by as much as 1.5% in 2025.
“Together, reciprocal tariffs and spreading trade policy uncertainty would lead to a 1.5 per cent decline in world merchandise trade in 2025,” the report stated, according to Bloomberg.
The global trade body acknowledged that protectionist measures like tariffs may provide short-term gains such as increased domestic production and reduced trade deficits — all key pillars of Trump’s economic platform — but emphasized the long-term risks.
“Higher import tariffs generally have an overall net negative effect on economic activity and trade,” the WTO noted.
China has already responded with retaliatory tariffs and new restrictions on key U.S. industries, including controls on exports of vital raw materials. The WTO warned that such tit-for-tat actions could worsen inflationary pressures globally.
“Tariffs on hard-to-replace goods could significantly impact inflation or raise inflation expectations,” the report added.
Despite the bleak outlook for 2025, the WTO anticipates a modest rebound in 2026, with global trade projected to grow by 2.5%, provided tensions ease and stability returns.
