WTO slashes trade forecast over Trump tariffs
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The news: The World Trade Organization has slashed its 2025 trade forecast, warning Trump’s tariffs will tip global goods trade into decline instead of previously expected growth.
The numbers: The WTO said it is expecting a 0.2% decline instead of the 2.7% growth it predicted earlier, citing US President Donald Trump’s tariffs.
It said Trump’s measures, including a 10% tariff on most imports and a 145% rate on Chinese goods, will reduce exports and imports and that retaliatory measures could deepen the slump.
North America is expected to see the steepest drop in goods traded, with USMCA exports forecast to fall 12.6% and imports 9.6%. If reciprocal tariffs are reintroduced and countries retaliate, global trade could shrink 1.5% this year, it said.
The WTO estimates US-China trade will fall 81%. While services trade is forecast to grow 4% in 2025, down from 6.8% in 2024, due to weakening demand related to goods trade.
What they said: WTO director-general Ngozi Okonjo-Iweala warned of “geopolitical fragmentation,” saying “we’re very concerned” about US-China decoupling. She highlighted risks to poor nations, saying “five of the ten economies facing the highest reciprocal tariffs are least developed countries.”
Okonjo-Iweala also conceded the US had “a point” about other countries relying too heavily on its market, contributing to its large trade deficit. She said production was overly concentrated in some sectors and called for greater diversification.
“They need to diversify. I think over-concentration in the production of certain goods should be looked at,” Okonjo-Iweala said.
“To have 95 per cent of semiconductors produced in one part of the world does not build global resilience. To have 80 per cent of vaccines exported by 10 countries in the world does not build resilience.”
The sources: World Trade Organisation , The Financial Times
