The World Trade Organisation (WTO) has made a U-turn in its previous prediction for international trade.
In a swift move, the WTO sharply downgraded its forecast for global trade, blaming Donald Trump’s aggressive tariff policy, which it warns could seriously reverse trading and damage the global economy.
The WTO had expected global trading of goods to grow by 2.7% in 2025, but now anticipates that it will contract by 0.2%. Similarly, global GDP growth has been revised downward, from 2.8% to 2.2%.
WTO Director-General Ngozi Okonjo-Iweala raised alarm over the increasing rift between the US and China, warning that a sharp fall in trade, which could be up to 91% without tech exemptions, could mark a dangerous decoupling of the world’s two largest economies. According to The Guardian, she described this as “a phenomenon that is worrying” with “far-reaching consequences.”
The US slapped a blanket 10% tariff on imports, with China-facing duties up to 145%, targeting key sectors such as autos and steel. While Trump’s larger “reciprocal” tariffs were paused for 90 days to allow negotiations, following turmoil in financial markets, the WTO warns that reintroducing them could worsen the crisis. If that happens, it would lead to a 0.8% drop in trade, and potentially 1.5% if global policy uncertainty continues to spread.
The WTO says other regions may still post trade gains, but the sharp decline in US trade will drag the global outlook. It may convene an emergency meeting of member states to discuss some pressing issues that require attention.
Trump’s unpredictable tariff declarations—beginning with his so-called “liberation day” announcement on 2 April—have triggered widespread uncertainty, which the WTO says is already weakening business confidence, investment, and future trade growth. The International Monetary Fund (IMF) and World Bank have also cautioned that a tariff war would adversely affect international trade.