As global uncertainties mount due to US-China trade conflicts, the World Trade Organization (WTO) has issued alarming forecasts regarding the state of global trade. On Wednesday, WTO Director-General Ngozi Okonjo-Iweala described the deteriorating US-China relations as "really worrying" during a press conference in Geneva.
The latest report anticipates a drop in global goods trade by 0.2% this year, a stark reversal from prior projections that expected growth of 2.7% by 2025. The effects of rising tariffs, particularly those imposed by the United States, are expected to weigh heavily on trade activity, especially in North America, where declines may surpass 10%.
WTO chief economist Ralph Ossa remarked, "Tariffs serve as a policy lever with extensive, often unintended repercussions." Ongoing political uncertainty and reciprocal tariffs are cited as severe risks, which could deepen the downturn in international trade flows. The United Nations Conference on Trade and Development (UNCTAD) has also highlighted similar concerns, projecting global growth to slow to 2.3% in 2025 amidst increasing trade tensions. These forecasts suggest a potential economic downturn looming within the global marketplace.
The US initiated a baseline tariff of 10% on most foreign imports on April 5, though exemptions exist for certain countries and goods. Meanwhile, China is facing even steeper tariffs averaging around 145%. Following these developments, the US stock market reacted negatively, reflecting growing apprehensions about trade stability.
Despite the forecasted downturn with the US, the WTO's report indicates that some regions, including Asia and Europe, may still enjoy modest trade growth this year. In a notable first, the organization has included a projection for services trade, which is estimated to increase by 4% by 2025.
President Trump has consistently maintained that tariffs will encourage American consumers to embrace domestically produced goods, increase tax revenues, and attract more foreign investments. However, critics argue that reshoring manufacturing is a convoluted process that may take years, potentially leaving the economy in a precarious state.
While President Trump has occasionally rolled back tariffs in light of rising criticism, the uncertainty surrounding trade policy continues to cast a long shadow over both US and global economies, with the situation remaining in flux.
