What's happened
The World Trade Organization (WTO) forecasts a 0.2% decline in global merchandise trade for 2025, primarily due to escalating tariffs between the US and China. North America is expected to see the steepest drop, with exports projected to fall by 12.6%. The situation poses significant risks for vulnerable economies, particularly in Africa.
What's behind the headline?
Key Insights
- Trade Decline: The WTO's prediction of a 0.2% decline in global trade highlights the severe impact of US-China tariffs, which could escalate further.
- North America Impact: Exports from North America are expected to drop by 12.6%, indicating a significant contraction in trade flows.
- Vulnerable Economies: Countries like Lesotho and Cote d'Ivoire, heavily reliant on exports to the US, face acute risks from tariff policies.
- Future Outlook: If the US resumes its toughest tariffs, a further decline of 1.5% in global trade could occur, exacerbating economic instability.
- China's Strategy: As trade with the US diminishes, China is likely to seek new markets, potentially increasing exports to regions outside North America by 4-9%.
What the papers say
The WTO's Director-General, Ngozi Okonjo-Iweala, expressed concern over the 'decoupling' of the US and China, stating that it could lead to a fragmented global economy. According to the South China Morning Post, China's exports to Africa have increased, but imports from the continent have declined, reflecting the complex dynamics of global trade. Meanwhile, the Independent highlights that the uncertainty surrounding tariffs is dampening business confidence, which could further impact trade flows. The Guardian emphasizes the potential for a significant decline in trade if the US resumes its toughest tariffs, illustrating the precarious nature of the current trade environment.
How we got here
The WTO's revised forecast reflects ongoing trade tensions, particularly the US's imposition of tariffs on imports from China and other nations. This has led to a significant downgrade from earlier expectations of trade growth, raising concerns about the broader economic impact.
Go deeper
- How will these trade declines affect global economies?
- What are the implications for African countries?
- What actions might China take in response to US tariffs?
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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How Will the Decline in Global Trade Affect Local Economies?
The recent forecast by the World Trade Organization (WTO) predicts a decline in global merchandise trade, raising concerns about its impact on local economies. As trade tensions escalate, particularly between major economies like the US and China, many are left wondering how these changes will affect their communities and businesses. Below are some common questions regarding the implications of this decline.
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How are US-China tariffs affecting global trade?
The ongoing trade tensions between the US and China have significant implications for global trade dynamics. As tariffs escalate, many are left wondering how these changes will impact economies worldwide, particularly vulnerable regions. Below, we explore the effects of these tariffs and their broader implications.
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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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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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