WTO Warns of Global Trade Decline Due to US Tariffs

Wed Dec 17 2025 21:08:13 GMT+0200 (Eastern European Standard Time)

The World Trade Organization predicts a significant reduction in global trade, particularly in North America, as a direct consequence of US-imposed tariffs amid escalating trade tensions.

The WTO has revised its global trade outlook, anticipating a downturn of 0.2% this year, largely driven by US tariffs and deteriorating US-China relations. While North America faces a steep decline, Asia and Europe are expected to experience modest growth.

The World Trade Organization (WTO) has issued a concerning forecast regarding the state of global trade amid escalating tensions between the United States and its trading partners. The organization projected a downturn in global trade for this year, attributing this decline to tariffs imposed by US President Donald Trump. The analysis suggests "severe downside risks," including retaliatory tariffs and political uncertainties, could exacerbate the situation, especially in North America where trade is expected to plummet by more than ten percent.

At a press conference in Geneva, WTO Director-General Ngozi Okonjo-Iweala expressed alarm over the growing "decoupling" of the US and China, labeling it a "really worrying" phenomenon. Earlier projections anticipated a 2.7% increase in global goods trade by 2025; however, the forecast now indicates a slight decrease of 0.2%.

Chief economist Ralph Ossa articulated the unintended consequences tariffs can have, emphasizing their dampening effect on trade flows, which can lead to reduced exports and weakened economic activity. Compounding these challenges, the United Nations Conference on Trade and Development (UNCTAD) reported that global growth could slow to 2.3% in 2025, hovering below the 2.5% threshold often associated with an impending global recession.

The US has enacted baseline tariffs of 10% on nearly all foreign imports, with notable exemptions. In contrast, China's tariffs have surged to 145% on various goods. These trade tensions have already affected financial markets; immediately following the tariff announcements, US stock indexes experienced declines amid uncertainty.

Despite the potential downturn in US trade, the WTO forecast indicates that some regions—namely Asia and Europe—are still likely to see positive trade growth this year. The report, which also for the first time offers insights into services trade, predicts that this sector will grow by 4% in 2025, representing a slight downward adjustment from earlier expectations.

Trump's administration has frequently altered its stance on tariff policies since his inauguration, introducing measures intended to stimulate domestic consumption of American-made goods and generate tax revenue while promising long-term investment. Nevertheless, critics argue that reshoring manufacturing is a complex and drawn-out process, questioning the short-term impact on the economy. Notably, just shortly after imposing steep tariffs on approximately 60 trading partners, the President announced a temporary pause on these tariffs for nearly all countries except China, reflecting pressures from both political leaders and market fluctuations.

As trade negotiations continue, businesses are urged to remain vigilant with the evolving landscape as the ripple effects of these tariffs unfold across the global economy.