Global trade is facing a storm as rising tariff tensions and policy uncertainty cast a shadow over growth forecasts. The latest reports from leading international organizations reveal a challenging outlook for the world economy.
According to the World Trade Organization's (WTO) Global Trade Outlook and Statistics report, global merchandise trade is expected to decline by 0.2% in 2025 under current tariff conditions—nearly 3 percentage points lower than previous estimates under a low tariff scenario. The report warns that a reinstatement of U.S. reciprocal tariffs could drive this decline as steeply as 1.5%, intensifying market pressures worldwide.
Regional impacts vary markedly. North America is projected to experience a particularly sharp drop, with exports forecast to fall by 12.6%. In contrast, Asia is set to record modest growth, with both exports and imports rising by 1.6%, while Europe sees smaller increases of 1.0% in exports and 1.9% in imports.
WTO Director-General Ngozi Okonjo-Iweala emphasized the risks at a recent press conference, stating that the prevailing trade policy uncertainty is acting as a brake on global growth. She stressed the need to exempt the least developed economies from harsh tariff measures to help cushion the negative effects of such policies.
Adding to the caution, the United Nations Trade and Development (UNCTAD) report on Trade and Development Foresights 2025 warned that the world economy is veering toward a recessionary trajectory, with global growth projected to slow to 2.3% next year. The report highlighted how heightened trade tensions and historically high policy uncertainty are delaying investment decisions and curbing hiring, especially impacting the world’s most vulnerable economies.
Interestingly, UNCTAD also pointed to the growth of South-South trade as a beacon of resilience. Spearheaded in part by the development initiatives in the Chinese mainland, this surge in economic integration among developing regions offers a valuable counterbalance amid the prevailing uncertainties.
As global trade dynamics evolve, the call for policy stability and multilateral cooperation has never been more urgent. Leaders, innovators, and changemakers around the world are watching closely, understanding that a stable and open trading system is essential to sustaining long-term economic growth.
Reference(s):
Global trade, growth forecasts downgraded amid rising trade tensions
cgtn.com
