The World Trade Organization (WTO) has warned that global goods trade is expected to shrink this year, driven by sharp declines in imports and exports from North America following the United States’ recent tariff overhaul.
The WTO had previously projected steady trade growth for 2025 and 2026. However, after the US introduced widespread tariffs and its trading partners responded with retaliatory measures, the organisation’s economists have issued a ‘substantial downgrade’ to earlier forecasts.
Global goods trade volume is now projected to fall by 0.2% in 2025, after a 2.9% increase last year. The downturn is largely attributed to North America, where exports are expected to slump by 12.6% and imports by 9.6%, according to the WTO.
The forecast is based on tariff policies as of April 14, with the WTO cautioning that there are ‘severe downside risks’ if trade tensions escalate. The introduction of further reciprocal tariffs or uncertainty-driven spillover effects could result in a sharper 1.5% decline in global goods trade, significantly impacting export-dependent least-developed countries.
“I am deeply concerned by the uncertainty surrounding trade policy, including the US-China stand-off,” said WTO Director-General Ngozi Okonjo-Iweala.
As of press time, the United States maintains tariffs of 145% on most Chinese imports, with China imposing retaliatory tariffs of 125% on US goods. The WTO expects this situation to trigger substantial trade diversion, with Chinese exports anticipated to grow by 4% to 9% in non-North American markets.
Meanwhile, US imports from China are projected to fall sharply in sectors such as textiles, apparel, and electrical equipment, creating potential opportunities for alternative suppliers. However, the WTO notes that some markets are growing increasingly concerned about intensified competition from Chinese manufacturers, and highlights that least-developed countries remain particularly vulnerable to external economic shocks.
A 90-day suspension on some proposed US tariffs, announced by President Donald Trump on April 9, has “temporarily relieved some of the pressure on global trade,” according to Okonjo-Iweala. Nevertheless, WTO Chief Economist Ralph Ossa warned that ongoing uncertainty over longer-term trade policy continues to have a “significant dampening effect on trade flows.”
“Tariffs are a policy lever with wide-ranging, and often unintended consequences,” Ossa said. “In a world of growing trade tensions, a clear-eyed view of those trade-offs is more important than ever.”
The WTO’s revised forecast coincides with a warning from UN Trade & Development, which said today that the global economy is on a ‘recessionary trajectory,’ driven by escalating trade tensions and persistent uncertainty. The agency now expects global growth to slow to 2.3% this year, as tariffs disrupt supply chains and erode predictability. “This is already translating into delayed investment decisions and reduced hiring,” the UN agency added.
TRADE WORLD | WTO Warns US-China Trade War Could Cut Global Trade by 80%
