The World Trade Organization (WTO) forecast on Wednesday that President Trump’s trade policies would reduce global trade in goods by nearly three percentage points this year. This projected decline is attributed to increased tariffs, which raise the cost of U.S. imports, provoke retaliatory measures, and slow overall economic activity.
Initially, the WTO anticipated that goods trading would grow by approximately 2.7 percent, in line with the global economy. However, the organization now expects a contraction of 0.2 percent, a significant decrease from the 2.9 percent growth observed last year.
President Trump has implemented a range of tariffs, including a 10 percent levy on most imports, a minimum tariff of 145 percent on imports from China, and tariffs on goods from Canada and Mexico, along with sector-specific tariffs targeting steel, aluminum, and vehicles. The Trump administration argues that these measures will help revive U.S. manufacturing and boost the economy, although many economists warn that the tariffs could hinder economic growth.
The WTO, based in Geneva, stated that its estimates were based on the tariff situation as of Monday, and trade could decline further if conditions worsen. The organization projected that the tariffs would have the most significant impact on North American trade, with exports expected to decrease by 12.6 percent and imports by 9.6 percent by 2025. Asia is projected to be the next most affected region, while both Asia and Europe are expected to experience modest growth in exports and imports.
Global trade remains at risk due to the potential reintroduction of President Trump’s reciprocal tariffs, which were recently paused for 90 days. The administration is currently negotiating trade agreements with individual countries. If these tariffs are reinstated, along with the uncertainty they create, the WTO estimates that global trade could shrink by 1.5 percent this year.
The ongoing trade conflict between the United States and China is expected to be particularly disruptive. High tariffs could lead to a reconfiguration of global trade patterns, with Chinese exports redirected to other markets and the U.S. seeking new sources for imports of textiles, clothing, and electrical equipment.
WTO Director-General Ngozi Okonjo-Iweala expressed deep concern regarding the uncertainty surrounding trade policies, particularly the U.S.-China trade standoff. She noted that while the recent tariff pause provided temporary relief, the ongoing uncertainty poses a risk to global growth, with potentially severe implications for vulnerable economies.
Okonjo-Iweala emphasized the correlation between trade and economic growth, highlighting that trade has historically driven economic expansion. She voiced concerns about the negative effects of trade uncertainties on financial markets and broader economic areas, particularly on poorer nations.
In a report released on the same day, the United Nations Trade and Development body projected that trade policy shocks, uncertainty, and financial instability would dampen global economic activity. It forecasted a slowdown in global growth to 2.3 percent in 2025, down from 2.8 percent the previous year, indicating a potential global recessionary phase.
Concerns regarding shifts in economic policy have reached unprecedented levels this century, with uncertainty about trade policy impacting businesses and long-term planning decisions, according to the U.N. agency.
For the first time, the WTO also began to project future trends in trade in services, which encompasses sectors such as business consulting, financial services, education, and tourism. While the Trump administration has focused primarily on trade in goods, the U.S. maintains a trade surplus in services, a sector that employs the majority of Americans. The WTO noted that services accounted for over a quarter of global trade last year and grew by 9 percent in 2024 compared to the previous year. Although tariffs apply only to goods, their impact is also expected to affect services trade.