W.T.O. Projects Sharp Pullback in Global Trade, Citing Trump's Tariffs

New York Times

16-04-2025

The World Trade Organization forecast on Wednesday that President Trump's trade policies would shave nearly three percentage points off the volume of global trade in goods this year, as tariffs raise the price of U.S. imports, invite retaliation and slow economic activity.
At the start of the year, the W.T.O. expected goods trading to continue growing roughly in line with the global economy, expanding by 2.7 percent. Now it expects it to contract by 0.2 percent instead. That's a sharp drop from last year, when goods trade grew by 2.9 percent.
Mr. Trump has introduced a suite of tariffs, including a 10 percent tariff on most of the world, a minimum tariff of 145 percent on U.S. imports from China, levies on goods from Canada and Mexico and sector-specific tariffs targeting steel, aluminum and vehicles. The Trump administration says this will help bring manufacturing back to the United States and boost the economy, though many economists have predicted the tariffs will instead be a drag on economic activity.
The W.T.O., a Geneva-based group that monitors patterns in global trade and coordinates trade negotiations and disputes among its members, said that the estimates were based on the tariff situation as of Monday, and that trade could shrink further 'if the situation deteriorates.'
The tariffs will have the biggest impact on trade in North America, the group said, where it expects exports will plummet 12.6 percent and imports will drop 9.6 percent in 2025. Asia will be the next most affected, but Asia and Europe will still post modest growth in both exports and imports, the group forecasts.
The group said global trade was particularly at risk from the potential return of Mr. Trump's 'reciprocal tariffs.' The president paused those tariffs last week for 90 days, and the Trump administration is now trying to negotiate trade deals with individual countries.
If they go back into effect, those levies plus the uncertainty they create for global businesses could cause global trade to shrink 1.5 percent this year, the W.T.O. said.
The W.T.O. said the ongoing trade clash between the United States and China will be particularly disruptive. High tariffs between the countries would lead to a reshuffling in global trade, the group said. Chinese exports would be diverted from the United States to other parts of the world, and the United States would find new sources for imports of textiles, clothing and electrical equipment.
Ngozi Okonjo-Iweala, the director general of the W.T.O., said she was 'deeply concerned by the uncertainty surrounding trade policy, including the U.S.-China standoff.'
The recent pause in tariffs temporarily relieved some of that pressure, she said. '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,' she said.
Ms. Ngozi said there was a strong relationship between trade and economic growth, with the exchange of goods driving economic expansion in the past.
'We've seen that the trade concerns can have negative spillovers into financial markets, into other broader areas of the economy,' she said at a news conference Wednesday. 'But I'm also very concerned about impact on poor countries,' she added. 'How do we safeguard them?'
In a report released Wednesday, the United Nations Trade and Development body also forecast that trade policy shocks, uncertainty and financial turbulence would weigh on global activity. It said global growth was expected to slow to 2.3 percent in 2025 from 2.8 percent the previous year, as the world economy entered 'a global recessionary phase.'
Concerns about economic policy shifts have hit their highest mark this century, and uncertainty about trade policy is affecting businesses and long-term planning decisions, the U.N. agency said.
For the first time, the W.T.O. also began projecting future patterns in trade in services, which includes sectors like business consulting, financial services, education and tourism. The Trump administration has focused its policies almost entirely on trade in goods, but the United States maintains a trade surplus in services, and the sector employs the vast majority of Americans.
The W.T.O. said that services accounted for more than a quarter of global trade last year, and expanded by 9 percent in 2024 compared with the year prior. Although tariffs only apply to goods, their effects will also dampen services trade, the W.T.O. said.