WTO Warns of Cooling Global Economy

Global trade is set to contract in 2025, with the World Trade Organization (WTO) slashing its forecast to a 0.2% decline in world merchandise trade volume. This sharp reversal comes on the heels of escalating tariff tensions, with U.S. President Donald Trump’s recent wave of reciprocal tariffs upending earlier expectations of continued growth. 

The WTO’s latest outlook paints a sobering picture, noting that the new estimate is nearly three percentage points lower than projections based on a low-tariff scenario.

The downturn will be felt unevenly across regions. North America is expected to see the steepest decline, with exports forecasted to fall by 12.6%, dragging global trade growth down by 1.7 percentage points. 

By contrast, Asia and Europe continue to support trade activity, although Asia’s contribution is now halved to just 0.6 points. The U.S.-China trade rift remains a major fault line, with American tariffs on Chinese goods now reaching a cumulative 145%, prompting Beijing to retaliate with duties of up to 125% on U.S. imports. 

What Does This Mean for Me?

If reciprocal tariffs are reinstated and trade policy uncertainty spreads, the WTO warns of a potential 1.5% drop in trade volume for 2025. For least-developed countries, already vulnerable to external shocks, this scenario could be especially damaging. 

Still, the rerouting of trade flows away from China-U.S. channels may open new export opportunities for other regions, particularly in textiles and electrical goods. However, the broader outlook remains clouded by volatility and uneven regional resilience.