Tariff uncertainty overshadows global trade outlook

By Melissa Lucas

Reckless, flip-flopping trade policy implemented by President Trump stunned trading partners and global markets in early April, while overshadowing global trade outlook.

The World Trade Organization warned Wednesday that the outlook for global trade has deteriorated sharply in the wake of President Trump's tariffs regime.

According to "Global Trade Outlook and Statistics" released by WTO, based on the tariffs currently in place, and including a 90-day suspension of “reciprocal tariffs,” the volume of world merchandise trade is now expected to decline by 0.2% in 2025, before posting a “modest” recovery of 2.5% in 2026. The decline is anticipated to be particularly steep in North America, where exports are forecast to drop by 12.6% this year.

The WTO also warned that “severe downside risks exist,” including the application of “reciprocal” tariffs and a broader spillover of policy uncertainty, “which could lead to an even sharper decline of 1.5% in global goods trade”.

On the flip side, the report indicates that the disruption in US-China trade is expected to trigger significant trade diversion, which will raise concerns among third markets about increased competition from China.

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