US' reciprocal tariffs to weigh on its imports, depress trading partners' exports: WTO
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New Delhi: Global merchandise trade is projected to grow 0.9% in 2025, up from a contraction of 0.2% forecast in April but down from the 2.7% estimate pre-dating the tariff increases as the US' higher reciprocal tariff rates introduced on August 7 would weigh increasingly on imports in the US and depress exports of its trading partners in the second half of 2025 and in 2026, the World Trade Organization (WTO) said Friday.The upgrade is mostly due to frontloading of imports in the US. However, higher tariffs over time will weigh on trade, bringing next year's expected trade volume growth down to 1.8% from 2.5% previously, it cautioned.'Higher reciprocal tariff rates introduced on August 7 are expected to weigh increasingly on imports in the US and depress exports of its trading partners in the second half of 2025 and in 2026,' WTO said in its trade forecast.North America's imports are expected to decline 8.3% in 2025, less than the 9.6% drop expected earlier. Exports from Asia could be a stronger-than-expected 4.9%, up from 1.6% in the previous forecast.'Frontloaded imports and improved macroeconomic conditions have provided a modest lift to the 2025 outlook. However, the full impact of recent tariff measures is still unfolding. The shadow of tariff uncertainty continues to weigh heavily on business confidence, investment and supply chains. Uncertainty remains one of the most disruptive forces in the global trading environment,' said WTO Director-General Ngozi Okonjo-Iweala.However, Okonjo-Iweala cautioned that a broader cycle of tit-for-tat retaliation that could be 'very damaging' to global trade has so far been avoided.As per the WTO, Asian economies are projected to remain the largest positive driver of world merchandise trade volume growth in 2025, although their contribution in 2026 will be smaller than predicted in April whereas North America will weigh negatively on global trade growth in both 2025 and 2026.Europe's contribution to trade in 2025 has gone from moderately positive to slightly negative, it said, adding that other regions, including economies whose exports are largely energy products, will see their positive contribution to trade growth shrink between 2025 and 2026 as lower oil prices reduce export revenues and dampen import demand.
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- Time of India
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