Global goods trade to contract 0.2% in 2025 on tariff war: WTO

THE GLOBAL MERCHANDISE trade volume is expected to contract by 0.2% on year in 2025 as against the earlier projection of 2.7% expansion, due to the global tariff war triggered by the US, according to the World Trade Organization (WTO).

- MUKESH JAGOTA New Delhi, April 16

The predicted decline in trade takes into account the 90-day suspension of reciprocal tariffs by the US. If implemented, reciprocal tariffs would reduce world merchandise trade growth by an additional 0.6%, the multilateral trade body said.

If the tariff situation escalates with retaliatory actions and more, the decline will be 1.5%, the body said in its Global Trade Outlook and Statistics Report. It, however, sees the recovery in volumes in 2026 with a growth of 2.5%.

Services trade, though not directly subject to tariffs, is also expected to be adversely hit, with the global volume of commercial services trade now forecast to grow by 4% in 2025 and 4.1% in 2026—well below baseline projections of 5.1% and 4.8%, respectively.

Although the high tariffs are limited to goods, their effects are expected to ripple across the broader economy, including on services trade.