• The World Trade Organization (WTO) predicts a 0.2% decline in global trade due to President Trump's tariff policies.
• US-China trade tensions could lead to further declines; the WTO estimates trade between the two countries may fall by 81%.
• North America is expected to suffer a decline of 12.6% in exports and 9.6% in imports this year.
• The WTO highlights serious downside risks could further shrink trade by 1.5% if current tariffs remain in place.
• Despite challenges, some regions like Asia and Europe may still see modest growth in trade.

The World Trade Organization (WTO) has forecasted a troubling 0.2% decline in global merchandise trade for 2025, attributing this shift directly to the tariff policies implemented by President Donald Trump. Initially projected global trade growth has been revised downward amid intensifying US-China trade disputes and reciprocal tariffs. WTO Director General Ngozi Okonjo-Iweala expressed concerns over the ramifications of these economic policies, stating, "The contraction in global merchandise trade growth is of big concern," according to Reuters.

Trump's administration has imposed a blanket 10% tariff on most foreign imports along with severe levies on steel and car imports, while a staggering 145% tariff applies specifically to Chinese goods. The situation escalated when China retaliated with a 125% tariff on US products, exacerbating the trade war. Okonjo-Iweala emphasized that the uncertainty created by such extreme measures has profound implications, stating, “the enduring uncertainty threatens to act as a brake on global growth," according to Reuters.

North America is predicted to bear the brunt of the trade contraction, with the WTO projecting exports to plunge by 12.6% and imports by 9.6%. These declines will significantly pull down overall merchandise trade growth, adding further economic stress to the region. "Under the current policy landscape, the region's performance would subtract 1.7 percentage points from world merchandise trade growth in 2025," the WTO stated, highlighting the potential for an economic downturn in North America, according to BBC.

The projected decline in US-China bilateral trade could reach an astonishing 81%, a scenario that raises alarms about the potential "decoupling" of these two major economies. Okonjo-Iweala warned that such a decoupling could lead to a fragmentation of the global economy along geopolitical lines, posing risks of long-term GDP declines of nearly 7%. She noted, “This level of a drop in US-China trade could contribute to a broader economic division," according to TRT Global.

While some areas are characterized by dire forecasts, regions like Asia are expected to witness modest trade growth around 1.6% in both exports and imports. European exports and imports are also predicted to increase by 1% and 1.9%, respectively, showing that not all areas are equally impacted by the US tariff policies. "Some sectors could still see an uptick as other regions fill the gaps left by decreasing US trade activities," reports Africanews.

The WTO anticipates a growing concern over the adverse impact of tariffs on services trade despite being indirect. The projected growth for commercial services trade has decreased to 4.0%, suggesting that global economic tensions are beginning to seep into broader markets. Chief economist Ralph Ossa commented, “Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows," stressing the interconnectedness of trade policies and economic health, according to BBC.