The trade war launched by Trump could seriously damage world trade. Merchandise trade volumes could decline by up to 1.5% this year if the US President decides to implement the reciprocal tariffs which have been temporarily suspended for 90 days. This would be the worst slump since the Covid period.
The World Trade Organization warns that a 10% levy on all imports alone would be enough to reduce trade by 0.2% year-on-year.
“I am deeply concerned by the uncertainty surrounding trade policy,,” said WTO Director-General Ngozi Okonjo-Iweala.
“The recent de-escalation of tariff tensions has temporarily relieved some of the pressure on global trade. However, 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.” he added.
At the beginning of the year, the WTO Secretariat predicted an expansion in world trade in 2025 and 2026, with a growth in merchandise trade volumes in line with the global GDP and commercial services growing even faster. However, the large number of new duties introduced since January prompted WTO economists to reassess the trade situation. This led to a substantial downward revision of the forecast for merchandise trade volumes and a smaller reduction in the forecast for commercial services, which are still expected to grow by 4 percentage points compared to last year.
Based on the current scenario, the WTO predicts that exports and imports to North America (USA, Canada and Mexico) will drop by 12.6% and 9.6% respectively. The collapse in trade could subtract 1.7 percentage points from the growth in global merchandise trade volumes in 2025, pushing the overall figure into negative territory.
Asia is expected to record a modest 1.6 % growth in both imports and exports. In Europe exports are forecasted to be +1 % year-on-year, while imports should increase by 1.9 %.
Translation by Giles Foster
