 "WTO sounds alarm as Trump tariffs threaten to reverse global trade this year")
The World Trade Organization (WTO) has warned that President Donald Trump’s tariffs are set to push global trade into reverse this year, dragging down economic growth worldwide.
According to The Guardian, citing latest report, the Geneva-based body slashed its forecast for goods trade growth from 2.7% to a 0.2% decline, citing Washington’s aggressive trade stance.
WTO Director-General Ngozi Okonjo-Iweala voiced alarm over the escalating economic rift between the US and China, calling the expected 81% to 91% drop in bilateral trade — excluding tech exemptions — a “decoupling” with “far-reaching consequences.”
She added that the WTO is consulting member states on whether to hold an emergency meeting to address the growing crisis, added the report.
“The outlook for global trade has deteriorated sharply due to a surge in tariffs and trade policy uncertainty,” The Guardian quoted WTO as saying in its report.
It had previously forecast global GDP growth of 2.8% for 2025, but now expects a weaker 2.2%.
The US has imposed a blanket 10% tariff on imports, with steep 145% rates on Chinese goods and targeted sectors like cars and steel. While global trade with most regions is expected to grow, the WTO predicts a sharp drop in US-linked trade, reported The Guardian.
Trump’s much higher “reciprocal” tariffs, paused for 90 days after rattling markets, could cause a 0.8% fall in global goods trade if reinstated. If this triggers broader trade policy uncertainty, that decline could worsen to 1.5%, with global GDP growth sinking to just 1.7%.
Impact Shorts
More ShortsThe WTO also warned that confusion following Trump’s April 2 tariff rollout — marked by mixed signals from Washington — is fueling instability and compounding economic risks.
“Uncertainty fosters an increased prudence in decision-making,” The Guardian quoted WTO as saying, pointing to evidence that “trade policy uncertainty can, among other things, dampen business confidence, reducing business investment and thereby impairing economic growth.”
“Ultimately, the degree to which uncertainty can be managed by firms will be a key determinant of whether the positive macroeconomic momentum observed in 2024 translates into sustained global trade growth in the coming years,” it added.
The WTO predicts some “diversion” of trade, as Beijing seeks new markets for its goods outside the US. Chinese exports to regions outside North America are expected to expand by between 4% and 9%, in 2025.
Services trade is not directly hit by Trump’s tariffs, but the WTO expects it to be affected indirectly.
“Tariff induced declines in goods trade weaken demand for related services such as transport and logistics, while broader uncertainty dampens discretionary spending on travel and slows investment-related services,” the WTO report warns.
The WTO, once central to global trade negotiations, is facing growing doubts as globalisation slows and US tariffs bypass core rules.
Trump’s tariffs violate the WTO’s “most favoured nation” principle, which requires equal trade terms for all members.
China has called for a WTO investigation, warning: “Reciprocal tariffs are not – and will never be – a cure for trade imbalances. Instead, they will backfire, harming the US itself.”
With inputs from agencies
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