The World Trade Organization (WTO) calls the trade war unleashed by President Trump a “crisis” and warns that if the situation “deteriorating”, things could get worse.
Wednesday’s WTO Economist The forecast has been updated In 2025, we note that there was a “substantial downgrade” on commodity trading forecasts and a slight decline in the outlook for trade in services.
Much of the change was driven by new estimates in North America. This is expected to see an 12.6% drop in exports this year and a 9.6% drop in imports this year.
“Our simulations show that trade policy uncertainty has a major dampening effect on trade flows, reducing exports and weakening economic activity,” said Ralph Ossa, WTO chief economist. In a statement. “And more, tariffs are a policy lever with broad, often unintended consequences. In a world where trade tensions are rising, a clear view of these trade-offs is more important than ever.”
Trump suspends the massive tax on imports from most countries that he originally proposed on April 3, but he escalates retaliation measures against China, imposing a 145% tariff on most goods.
Trump has also launched other tariffs in Mexico and Canada.
The WTO estimates that the volume of global commodity trading will fall by 0.2% in 2025 under current conditions.
Economists estimate that trade could shrink to -1.5% in 2025 if “mutual tariffs” that the Trump administration has stopped take effect.
The trade in services is not subject to tariffs, but the WTO warns that it does not meet the initial forecast, with global volumes predicted to be 4% slower than the initial estimate.
The WTO predicted that global trade would continue to expand in 2025 and 2026 at the beginning of the year, resulting in commodity trade growth in line with global GDP estimates and trade in commercial services increasing at a faster pace.
The organization recently reevaluated its trade outlook due to a dramatic tariff change planned by Trump.
“I am deeply concerned about the uncertainty surrounding trade policies, including US-China standoffs,” WTO Director Ngozi Okonjo-Iweala said in a statement. “Recent tariff tension emissions have temporarily eased some of the pressure on global trade, but persistent uncertainty threatens to serve as a brake on global growth, especially with severe negative consequences for the world, the most vulnerable economy.”
“Facing this crisis, WTO members have an unprecedented opportunity to inject dynamism into organizations, nurture the field of level play, streamline decision-making, and adapt agreements to better meet today’s global reality,” she added.
