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(MENAFN- The Arabian Post)
The World Trade Organization has projected a 0.2% decline in global merchandise trade volume for 2025, a significant downgrade from earlier forecasts. This contraction is attributed to escalating tariff disputes and increasing policy uncertainties, particularly between major economies.
The WTO’s latest Global Trade Outlook and Statistics report, based on policies effective as of April 14, indicates that the anticipated decline is nearly three percentage points lower than projections under a“low tariff” scenario. The report underscores the vulnerability of global trade to protectionist measures and geopolitical tensions.
A central concern is the intensifying trade conflict between the United States and China. The U.S. has implemented a 10% tariff on all imports and a 145% tariff on Chinese products. These measures have led to a significant reduction in bilateral trade, with estimates suggesting a potential 91% drop in U.S.-China merchandise trade if exemptions for technology products are not granted.
The WTO warns that the reimposition of paused tariffs could further shrink global trade by 0.8%, with a worst-case scenario projecting a 1.5% decline. Such developments could weaken global GDP growth to 1.7%, down from earlier expectations. The organization emphasizes that increasing trade uncertainty undermines business confidence and investment, potentially leading to broader economic instability.
Regional impacts vary, with North America expected to experience the most significant downturn, including a 12.6% decrease in exports and a 9.6% drop in imports. Europe and Asia are also projected to face reduced growth rates. Conversely, some less developed countries might temporarily benefit from trade diversions, especially those exporting products similar to China’s.
The WTO’s report also highlights the challenges posed by rising protectionism and the fragmentation of global trade. The organization calls for adherence to international trade rules and cautions against unilateral measures that could exacerbate economic uncertainties. The WTO supports initiatives to investigate the impacts of such tariffs and encourages dialogue to resolve trade disputes.
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