What's happened
The World Trade Organization (WTO) has revised its forecast for global merchandise trade, predicting a 0.2% decline in 2025 due to escalating tariffs and trade tensions, particularly between the US and China. The situation could worsen if further tariffs are imposed, potentially leading to a 1.5% drop in trade volume.
What's behind the headline?
Key Insights
- Impact of Tariffs: The WTO attributes the decline in trade to US President Trump's shifting tariff policies, particularly the increase in tariffs on Chinese imports to 145%. This has created significant uncertainty in global markets.
- Regional Disparities: North America is expected to experience the steepest declines, with exports projected to fall by 12.6% and imports by 9.6%. This highlights the localized impact of global trade policies.
- Decoupling of Economies: WTO Director-General Ngozi Okonjo-Iweala expressed concern over the potential decoupling of the US and Chinese economies, which could lead to long-term negative consequences for global GDP.
- Future Projections: If the current trend continues, the WTO warns of a possible 1.5% decline in global trade, marking the most significant downturn since 2020. This could have cascading effects on global economic growth, particularly for vulnerable economies.
- Uncertainty's Role: The ongoing uncertainty surrounding trade policies is likely to dampen business confidence and investment, further exacerbating the decline in trade flows.
What the papers say
According to the South China Morning Post, the WTO's forecast reflects a significant downgrade from earlier expectations of a 3% growth in trade. WTO Director-General Ngozi Okonjo-Iweala stated, "The contraction in global merchandise trade growth is of big concern." The Independent highlighted that trade in goods worldwide could slump by 1.5% if Trump escalates tariffs, emphasizing the uncertainty's impact on business confidence. Bloomberg noted that the WTO's predictions are now almost three percentage points lower than they would have been without the trade war, indicating a dramatic shift in the global trade landscape. The Guardian pointed out that the decoupling of the US and China could lead to an 81% drop in trade between the two nations, which would have far-reaching consequences for the global economy.
How we got here
The WTO's updated forecast comes amid ongoing trade disputes, particularly between the US and China, where tariffs have significantly impacted trade dynamics. Initially, growth was expected, but recent policy shifts have led to a stark downgrade in projections.
Go deeper
- What are the implications of the trade decline?
- How might this affect global economies?
- What actions are being taken to address trade tensions?
Common question
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How Are Recent U.S. Tariffs Impacting Global Trade and the Economy?
The recent imposition of tariffs by the U.S. has sparked significant changes in global trade dynamics. As countries and companies adjust to these new economic realities, many are left wondering about the broader implications. This page explores key questions surrounding the impact of tariffs on trade, the economy, and specific companies navigating these challenges.
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What are the latest predictions for global trade in 2025?
As global trade faces unprecedented challenges, understanding the latest predictions is crucial for businesses and investors alike. With escalating tariffs and ongoing tensions, particularly between the US and China, many are left wondering how these factors will shape the future of international commerce. Below, we explore key questions surrounding global trade dynamics and their implications.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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The World Trade Organization is an intergovernmental organization that is concerned with the regulation of international trade between nations.
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China, officially the People's Republic of China, is a country in East Asia. It is the world's most populous country, with a population of around 1.4 billion in 2019.
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The United States of America, commonly known as the United States or America, is a country mostly located in central North America, between Canada and Mexico.
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