Overview

• The WTO now forecasts a 0.2% contraction in global merchandise trade for 2025, a sharp downgrade from its previous projection of 3.0% growth.
• Escalating U.S. tariff measures, including increased duties on steel, cars, and goods from China, are cited as key drivers of the downturn.
• If full tariff rates are reinstated, the contraction could deepen to 1.5%, marking the steepest decline since the COVID-19 pandemic in 2020.
• The U.S.-China trade decoupling is projected to reduce bilateral merchandise trade by 81%, with potential long-term global GDP losses of up to 7%.
• Services trade, though not directly subject to tariffs, is expected to grow below baseline projections, reflecting broader economic vulnerabilities.