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

Resilient financial results as Rio Tinto grows and diversifies

Rio Tinto has announced a 6% production year-on-year uplift, thereby delivering on strategy through... Read more

K-SURE and Trafigura $200m financing agreement to support Korean shipping

The Korea Trade Insurance Corporation (K-SURE) and Trafigura, a global leader in the commodities industry... Read more

BHP record copper and iron ore production drives strong 2025 performance

BHP have released their Operational Review for the year ended 30 June 2025.BHP Chief Executive Officer... Read more

Dynamic Mining shipping arm and GeoServe’s one-year milestone

A strategic collaboration between Icon Gulf Trading DMCC (part of the Dynamic Group) and GeoServe Energy... Read more

SSAB and Metal Solutions start partnership in fossil-free steel

SSAB and Metal Solutions have entered a long-term partnership for the supply of decarbonized steel with... Read more

NGFA thanks lawmakers for including industry priorities in ‘One Big Beautiful Bill’

The National Grain and Feed Association (NGFA) in the USA has applauded Congress for including a slate... Read more

Fertilizers Europe: Commission announcement on CBAM falls short

Fertilizers Europe’s have released their reaction to the European Commission announcement on the... Read more

Bunge completes sale of its North America corn milling business

Bunge Global SA has confirmed that it has completed the previously announced sale of its North America... Read more

SSAB secures additional EUR 430 million green financing for Luleå

Following the successful debt raising at the end of April 2025, SSAB has secured an additional EUR 430... Read more

Soaring demand opens up investment opportunities across West Africa

Despite China’s dominant position in securing commodities across Africa, there are still many... Read more