WTO Chief Warns of Global Trade Contraction Amid U.S. Tariff Surge

The World Trade Organization's Director-General has expressed concerns over the U.S.'s new tariffs, predicting a 1% contraction in global merchandise trade by 2025. The tariffs, including those from earlier in the year, may escalate into a tariff war, risking significant trade diversions and economic repercussions.

The Director-General of the World Trade Organization (WTO) has raised alarms regarding new tariffs announced by the United States. These tariffs, along with earlier ones, threaten to shrink global merchandise trade by approximately 1% by 2025.

In a statement, Ngozi Okonjo-Iweala expressed apprehension about the risk of these tariffs escalating into a full-blown trade war, possibly igniting a cycle of retaliatory measures that could further depress trade. The WTO notes that these tariffs might trigger significant diversion effects in international trade.

The WTO, which currently oversees 74% of global trade, has faced questions and concerns from its member states about the potential economic fallout from the U.S. tariffs. World leaders, including European Commission President Ursula Von Der Leyen, have criticized these tariffs, cautioning about their detrimental effects on the global economy. Observers worry that the U.S.'s tariff strategy could undermine the WTO's free-trade mandate.