The World Trade Organisation (WTO) estimates that because of United States President Donald Trump’s changing tariff policies and a stalemate with China, global trade in goods is expected to decline by 0.2% in 2025. However, if Trump implements his most aggressive “reciprocal” tariffs, the impact would be more severe.
Even in the absence of the most severe tariffs, the Global Trade Forum stated that trade will decline particularly sharply in North America, where imports are predicted to drop by 9.6% and exports by 12.6% this year. The recent tariff situation served as the basis for the WTO’s report.
World trade was initially predicted to continue expanding in 2025 and 2026, but the WTO economists were forced to significantly lower their forecast due to Donald Trump’s trade war, the forum said.
Donald Trump imposing his highest tariffs on most countries would cause businesses to become uneasy, which would result in a 1% drop in global trade in goods.
In order to allow more than 70 nations to address US trade concerns, Donald Trump earlier this month suspended the most severe set of tariffs for 90 days. In the meantime, he has been debating tariffs on their goods with Canada and Mexico for a long time and raising taxes on Chinese imports to 145%.
WTO Director-General Ngozi Okonjo-Iweala stated that “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, even after the 90-day pause.”
In the statement, WTO chief economist Ralph Ossa said, “Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity. Moreover, tariffs are a policy lever with wide-ranging and often unintended consequences. In a world of growing trade tensions, a clear-eyed view of those trade-offs is more important than ever.”