The trade war launched by U.S. President Donald Trump could cause a contraction of up to 1.5% in global trade in 2025, according to the World Trade Organization.
In its Global Trade Outlook report released last week, the organization noted that the temporary 90-day pause in reciprocal tariffs between the U.S. and 75 other countries helps contain the contraction of the global market, but warned that “significant downside risks persist.”
The WTO projects that under the current tariff scenario, global trade is expected to shrink by 0.2% in 2025, before growing 2.5% in 2026. However, if conflicts escalate, the contraction this year could reach the estimated 1.5%.
The forecasts are considerably worse than those made in October of last year, when the WTO had projected 3% growth for 2025. According to the organization, the sharp change in projections is a direct effect of the global tariff war that erupted in recent weeks.
The WTO also revised its global GDP growth projections for 2025 (2.2%) and 2026 (2.4%), a drop in both cases compared to previous estimates.
WTO Director-General Ngozi Okonjo-Iweala said she is “deeply concerned about the uncertainty surrounding trade policy, including the deadlock between the U.S. and China.” In a statement, she warned that “persistent uncertainty threatens to act as a drag on global growth, with serious negative consequences for the entire world, especially for the most vulnerable economies.”
On April 10, the European Union announced a 90-day suspension of its retaliatory measures against the U.S., in response to the tariff pause announced by Washington. The move opens the door for negotiations, and Trump has not ruled out extending the tariff truce period while countries seek new agreements.
The WTO also projects a sharp decline in exports (-12.6%) and imports (-9.6%) in North America in 2025, and revised the region’s 2025 GDP growth projection from 2% to 0.4%. The organization also forecasts modest growth for Asia (1.6% for both exports and imports), Europe (1% in imports and 1.9% in exports), and South America (0.6% in exports and 5% in imports).