WTO Warns: Global Trade Outlook for 2025 Deteriorates Sharply Amid Escalating Tariffs

April 16, 2025 — The World Trade Organization (WTO) has significantly downgraded its forecast for global merchandise trade in 2025, projecting a 0.2% decline. This marks a sharp reversal from earlier expectations of 3% growth, primarily due to escalating tariffs and mounting trade policy uncertainties.

Escalating U.S.-China Trade Tensions

The deterioration in trade outlook is largely attributed to intensified trade tensions between the United States and China. The U.S. has imposed tariffs up to 145% on Chinese goods, prompting reciprocal measures from China with tariffs reaching 125% on American imports. This tit-for-tat escalation is expected to reduce bilateral merchandise trade by 80% this year, effectively signaling a decoupling of the world's two largest economies.

Broader Economic Implications

The WTO warns that the ripple effects of these trade disputes could lower global GDP growth to 2.2% in 2025, down from earlier projections. The uncertainty surrounding trade policies is causing businesses to delay investment decisions, further dampening economic prospects.

Impact on Services Trade

While services trade is not directly affected by tariffs, the WTO notes a projected growth of only 4.0% in 2025, which is below the baseline projections. The slowdown is attributed to the overall decline in global economic activity and reduced cross-border investments.

Call for Multilateral Cooperation

WTO Director-General Ngozi Okonjo-Iweala emphasizes the need for renewed multilateral cooperation to address the current challenges. "The risks of over-dependence and the fragmentation of global trade are real. We must work together to restore confidence and stability in the international trading system," she stated.

For a deeper understanding of the WTO's latest report, visit the WTO Global Trade Outlook and Statistics.

Stay informed on global trade developments to navigate the evolving economic landscape effectively.