WTO: Trump’s tariffs will shrink global trade

(Posted on 16/04/25)

The volume of world merchandise trade is expected to decline by 0.2% in 2025 under current conditions, nearly three percentage points lower than what would have been expected under a "low tariff" baseline scenario, according to the WTO Secretariat's latest Global Trade Outlook and Statistics report released on 16 April. This is premised on the tariff situation as of 14 April. Trade could shrink even further, to -1.5% in 2025, if the situation deteriorates.

Services trade, though not directly subject to tariffs, is also expected to be adversely affected, with the global volume of commercial services trade now forecast to grow by 4.0%, slower than expected.

Director-General Ngozi Okonjo-Iweala said: "I am deeply concerned by the uncertainty surrounding trade policy, including the US-China stand-off. The recent de-escalation of tariff tensions has temporarily relieved some of the pressure on global trade. However, the enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, the most vulnerable economies in particular. In the face of this crisis, WTO members have the unprecedented opportunity to inject dynamism into the organization, foster a level-playing field, streamline decision-making, and adapt our agreements to better meet today's global realities."

At the start of the year, the WTO Secretariat expected to see continued expansion of world trade in 2025 and 2026, with merchandise trade growing in line with world GDP and commercial services trade increasing at a faster pace. However, the large number of new tariffs introduced since January prompted WTO economists to reassess the trade situation, resulting in a substantial downgrade to their forecast for merchandise trade and a smaller reduction in their outlook for services trade.

Risks to the merchandise trade forecast persist, particularly from the reactivation of the suspended "reciprocal tariffs" by the United States, as well as the spread of trade policy uncertainty that could impact non-US trade relationships. If realized, reciprocal tariffs would reduce global merchandise trade volume growth by 0.6 percentage points in 2025 while spreading trade policy uncertainty could shave off another 0.8 percentage points. Together, reciprocal tariffs and spreading trade policy uncertainty would lead to a 1.5% decline in world merchandise trade in 2025. These scenarios are explored in detail in the Analytical Chapter of the report. Risks to services trade related to the escalation in trade tensions are not currently captured in the forecast.

"Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity," WTO Chief Economist Ralph Ossa said. "Moreover, tariffs are a policy lever with wide-ranging, and often unintended consequences. In a world of growing trade tensions, a clear-eyed view of those trade-offs is more important than ever.”

The latest forecast marks a reversal from 2024, when the volume of world merchandise trade grew 2.9%, while GDP expanded by 2.8%, making 2024 the first year since 2017 (excluding the rebound from the COVID-19 pandemic) where merchandise trade grew faster than output.

In 2025, the impact of recent tariff measures on merchandise trade is expected to differ sharply across regions.

Latest News

Agreement secures long-term bulk logistics capacity for South African miner

Transnet SOC Ltd and Tshipi é Ntle Manganese Mining (Pty) Ltd have concluded a milestone 10-year... Read more

Bühler appoints Mike Häfeli as the new CEO of Grains and Food business

Bühler Group has announced a key leadership transition within its Grains & Food business. After... Read more

ADM increases export capacity with expanded Windsor, Ontario grain terminal

ADM Agri-Industries in Windsor has celebrated the opening of its expanded grain terminal at the Port... Read more

Anglo American and Teck to combine to form global critical minerals champion

Anglo American plc and Teck Resources Limited have announced that they have reached an agreement to... Read more

Ag leaders urge Senate to confirm Dr. Julie Callahan as Chief Negotiator

The National Grain and Feed Association (NGFA), joined by 89 agricultural organizations, has voiced... Read more

Rio Tinto streamlines to unlock additional shareholder value

Rio Tinto has announced a new operating model and executive team to shape the company’s next chapter... Read more

Government of Canada disappoints Canadian steel producers

Catherine Cobden, President and CEO of the Canadian Steel Producers Association (CSPA), has released... Read more

BHP’s record operational performance delivers resilient returns and growth

BHP have released financial results for the full year ended 30 June 2025.BHP Chief Executive Officer... Read more

Metso expansion in Antofagasta elevates support for Chilean mining

Metso has completed the expansion of its service centre in Antofagasta, Chile, reinforcing its ability... Read more

Alcoa explores feasibility of gallium critical mineral production in WA

Alcoa of Australia Limited, a wholly-owned subsidiary of Alcoa Corporation has announced a Joint Development... Read more