Global Trade Faces Downturn Amid Rising Tariffs and Policy Uncertainty

The World Trade Organization (WTO) has revised its 2025 global merchandise trade forecast from a 3.0% increase to a 0.2% decline, citing escalating tariffs and growing policy uncertainty as primary factors.

WTO Director-General Ngozi Okonjo-Iweala expressed concern over the contraction, highlighting its potential impact on global GDP and financial markets, particularly in developing economies.

The WTO warns that if trade tensions escalate further, the decline in global trade could deepen to 1.5%, marking the steepest drop since the height of the COVID-19 pandemic. 

The organization also notes that the ongoing trade policy shifts are making reliable forecasting difficult, as the global trading system moves from a rules-based to a deals-based framework.

The WTO emphasizes the need for careful consideration of trade-offs in policymaking amid rising global trade tensions.