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The World Trade Organization (WTO) has forecast a decline in global trade this year, directly attributing the downturn to tariffs imposed by US President Donald Trump. The WTO warned that "severe downside risks," including retaliatory tariffs and political uncertainty, could lead to an even more significant drop in global goods trade, particularly in North America, where trade is projected to fall by more than a tenth.
Ngozi Okonjo-Iweala, the WTO director general, called the "decoupling" of the US and China "a phenomenon that is really worrying to me".
The WTO previously expected global goods trade to expand by 2.7% in 2025 but it now forecasts it will fall by 0.2%.
Also on Wednesday, the UN trade and development body, UNCTAD, released its own report which forecasts global growth to slow to 2.3% in 2025 due to escalating trade tensions and uncertainty. It said the projection was below "the 2.5% threshold widely viewed as signalling a global recession".
A baseline tariff of 10% on almost all foreign imports to the US kicked in on 5 April, although some countries and goods are exempt. China has a much higher tariff, which now totals 145% on most goods.
The US stock market slid on opening on Wednesday with the big indexes falling amid the ongoing uncertainty.
Despite the prediction of plunging trade with the US, the WTO expects some regions will still see trade growth. It said Asia and Europe were still projected to post modest growth in both exports and imports this year.
"The collective contribution to world trade growth of other regions would also remain positive," the WTO report said.
For the first time, the report contains a forecast for services trade - which is when countries buy and sell services to each other instead of goods.
The WTO forecasts services trade to grow by 4% in 2025, which is around one percentage point less than expected.
