New WTO forecast reveals worldwide trade is set to fall by 0.2% in 2025, with North America facing sharp declines amid tariff uncertainty and U.S. policy shifts.
By Africalivenews Staff Writer
GENEVA — Global trade in goods is projected to shrink by 0.2% in 2025, the World Trade Organization (WTO) warned on Wednesday, citing escalating tariff tensions sparked by U.S. President Donald Trump’s evolving trade policies and a growing standoff with China.
According to the WTO’s latest forecast, the slowdown will be most severe in North America, where exports are expected to plunge by 12.6% and imports by 9.6%—even without the implementation of Trump’s most extreme proposed tariffs. Should the U.S. proceed with its harshest trade measures, global trade could contract by as much as 1.5%, triggering ripple effects across already fragile economies.
“The enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, the most vulnerable economies in particular,” said Ngozi Okonjo-Iweala, WTO Director-General.
The revised projections mark a sharp departure from earlier predictions that anticipated steady growth in global trade through 2025 and 2026. But the resurgence of trade protectionism—driven primarily by renewed U.S. tariff hikes and retaliatory measures—has cast a shadow over global economic recovery efforts.
Trump’s Tariff Tactics Reshape Global Forecast
The WTO report is based on global trade dynamics as of Monday, capturing the latest shifts in U.S. policy under President Trump’s second term. The Trump administration has embraced a strategy of “reciprocal tariffs,” targeting countries that the White House claims maintain unfair trade practices or imbalanced trade relationships with the U.S.
Earlier this month, Trump temporarily suspended his most aggressive tariffs for 90 days, offering more than 70 countries a narrow window to revise trade agreements and address American trade concerns. However, during this pause, Trump has raised tariffs on Chinese imports to 145%, while tensions with Canada and Mexico remain unresolved.
“Tariffs are a policy lever with wide-ranging and often unintended consequences,” said Ralph Ossa, the WTO’s chief economist. “Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity.”
According to the WTO, the combined effect of higher tariffs and regulatory unpredictability is discouraging investment, delaying shipping orders, and weakening supply chains—especially in key industries such as manufacturing, agriculture, and energy.
North America Hit Hardest Despite Temporary Reprieve
While the WTO’s global forecast shows a modest 0.2% contraction in trade volume for 2025, North America is bearing the brunt of the downturn. The forecasted 12.6% drop in exports and 9.6% decline in imports reflect the region’s central role in the current trade disputes.
The U.S.-Mexico-Canada Agreement (USMCA), which replaced NAFTA, has failed to insulate the continent from the volatility of Trump’s tariff threats. Canada and Mexico, both key U.S. trading partners, have responded cautiously to the 90-day tariff suspension, unsure whether long-term resolution is possible.
Economic analysts warn that this unpredictability may stall private sector investment and could contribute to a broader slowdown across North American economies in the second half of the year.
“Investors are taking a wait-and-see approach,” said an international trade analyst based in Toronto. “The inconsistency in trade policy is too high-risk for many exporters and importers to make long-term commitments.”
China Trade War Escalates Again
Trump’s decision to hike tariffs on Chinese goods to 145% has reignited a high-stakes trade battle with Beijing. The increase, the steepest since the first phase of the U.S.-China trade war in 2018, is already prompting warnings from economists about a sharp drop in bilateral trade flows.
In its report, the WTO highlighted the disruptive consequences of continued U.S.-China trade friction. Previous rounds of tariffs led to substantial trade diversion, increased costs for consumers and manufacturers, and supply chain bottlenecks—a scenario that now risks repeating on a larger scale.
China has yet to formally announce countermeasures, but experts expect retaliatory tariffs or restrictions on U.S. firms operating in China. The resulting uncertainty could compound global economic stress, particularly in Asia and Africa, where many economies rely heavily on trade with both the U.S. and China.
Global South at Risk of Collateral Damage
Developing economies are expected to suffer disproportionately from the global trade slowdown. The WTO cautioned that nations with high trade-to-GDP ratios and heavy dependence on exports—particularly in Sub-Saharan Africa and Southeast Asia—may face significant revenue losses and job cuts.
“The fallout from these trade policies will not be contained to the U.S. and China,” Okonjo-Iweala warned. “Emerging markets, especially those already grappling with debt or post-pandemic recovery, may find themselves pushed to the brink.”
In Africa, key sectors such as agriculture, textile manufacturing, and minerals exports could face severe headwinds. Many African economies rely on export demand from large markets like the U.S., China, and the EU. Any downturn in global trade volumes could stall progress toward the African Continental Free Trade Area (AfCFTA) and slow the region’s economic growth trajectory.
WTO Calls for Policy Stability and Dialogue
The WTO emphasized the need for greater policy coordination, transparency, and renewed international cooperation to restore confidence in global trade. While acknowledging that sovereign nations have the right to pursue fair trade, the organization urged restraint and cautioned against escalation.
“A clear-eyed view of trade-offs is more important than ever,” said Ossa. “Trade policy should be guided by evidence and long-term economic considerations—not short-term political wins.”
The WTO’s latest forecast serves as a stark reminder of how deeply interconnected the global economy has become—and how swiftly protectionist measures in one region can reverberate across continents.
Conclusion
As the 90-day pause on Trump’s stiffest tariffs ticks down, the world watches anxiously for signs of compromise or conflict. The WTO’s warning underscores that beyond political rhetoric, millions of jobs, supply chains, and livelihoods are at stake.
For now, the global trading system faces its most serious stress test in years. Without a renewed commitment to multilateralism and policy stability, the modest 0.2% contraction forecasted by the WTO may only be the beginning.
