US tariffs may drive global trade contraction this year: WTO

India's exports are likely to face strong headwinds, with the World Trade Organization (WTO) on Wednesday sharply downgrading its forecast for global merchandise trade volume in 2025—to a 0.2 percent contraction from its earlier estimate of 2.7 percent growth—after factoring in the 10 percent baseline tariffs imposed by the US.

- ASIT RANJAN MISHRA

India's exports in value terms grew 2.6 percent in 2024, while imports rose 6.6 percent during the calendar year.

However, the multilateral body warned that the reintroduction of now-suspended country-specific reciprocal tariffs by the Trump administration, and spreading trade policy uncertainty, could lead to a 1.5 percent decline in world merchandise trade in 2025.

In its Global Trade Outlook & Statistics Report, the WTO said the new estimate for 2025 is nearly 3 percentage points (points) lower than it would have been without recent policy shifts, and marks a reversal from the start of the year, when WTO economists had expected continued trade expansion.