Global Trade Forecast Slashed Amid U.S. Tariff Concerns

The World Trade Organization has reduced its global merchandise trade forecast, predicting a decline due to U.S. tariffs and spillover effects. This marks the steepest slump since the COVID pandemic. The WTO forecasts a recovery by 2026 but notes caution in interpreting predictions due to unprecedented trade policy shifts.

The World Trade Organization (WTO) announced a significant cut in its forecast for global merchandise trade, transitioning from expected growth to an anticipated decline. The revision comes in the wake of additional U.S. tariffs and their wider economic impacts, marking potentially the steepest slump since the COVID-19 pandemic.

The WTO's revised forecast predicts a 0.2% fall in goods trade. This is a stark shift from the 3.0% expansion forecasted in October. The changes were influenced by recent U.S. trade policy shifts, particularly President Donald Trump's tariffs on imports, including steel and cars, as well as global levies resulting from the ongoing trade war with China.

The organization highlighted that a reintroduction of full U.S. tariffs could cut goods trade growth by up to 1.5%, the most significant drop since 2020. Despite this downturn, the WTO projects a modest recovery by 2026, though it advises caution in interpreting these forecasts given the volatile trade policy landscape.

(With inputs from agencies.)