The World Trade Organization sharply cut its forecast for global merchandise trade from solid growth to a decline on Wednesday, saying further US tariffs and spillover effects could lead to the heaviest slump since the height of the Covid-19 pandemic.
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The WTO said it expected trade in goods to fall by 0.2 per cent this year, down from its expectation in October of 3.0 per cent expansion. It said its new estimate was based on measures in place at the start of this week.
“I’m very concerned, the contraction in global merchandise trade growth is of big concern,” WTO Director General Ngozi Okonjo-Iweala told reporters in Geneva.
US President Donald Trump imposed extra duties on steel and car imports as well as more sweeping global tariffs before unexpectedly pausing higher duties on a dozen economies. His trade war with China has also intensified with tit-for-tat exchanges pushing levies on each other’s imports beyond 100 per cent.
The WTO said that, if Trump reintroduced the full rates of his broader tariffs that would reduce goods trade growth by 0.6 percentage points, with another 0.8 point cut due to spillover effects beyond US-linked trade.
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Taken together, this would lead to a 1.5 per cent decline, the steepest drop since 2020.