The World Trade Organization cut its 2025 trade forecast on Thursday, projecting a 0.2% contraction in global merchandise trade volume as tariff increases and policy uncertainty weigh on the global economy.
The revised outlook represents a dramatic 3 percentage point reduction from earlier projections that had anticipated continued expansion, the WTO said in its April Global Trade Outlook.
“The outlook for global trade has deteriorated sharply due to a surge in tariffs and trade policy uncertainty,” the Geneva-based organization stated, pointing to US tariff measures implemented since January, including a 145 percentage point increase on Chinese imports.
Sponsored · Antimony Resources
Commercial services trade, while not directly targeted by tariffs, is also expected to slow, with 2025 growth projections cut to 4.0% from 5.1%.
The WTO warned that the reinstatement of “reciprocal tariffs” by the United States would further reduce trade growth, potentially leading to a 1.5% decline in global merchandise trade volume if uncertainty spreads beyond US trade relationships.
Regional impacts vary significantly, with North America projected to subtract 1.7 percentage points from global trade growth, effectively pushing worldwide figures into negative territory. Asia’s positive contribution has been halved to 0.6 percentage points.
The organization noted significant trade diversion effects, with Chinese merchandise exports projected to rise 4% to 9% in regions outside North America, while creating export opportunities for some developing economies in sectors like textiles and electronics.
Global GDP growth is now expected at 2.2% in 2025, down 0.6 percentage points from previous projections, with a slight recovery to 2.4% anticipated in 2026.
The forecast follows what the WTO called a “strong performance” in 2024, when merchandise trade grew 2.9% and commercial services expanded 6.8%.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
