Trump tariff could lead to contraction of global merchandise trade volumes by 1% this year: WTO chief
The recent announcements will have substantial implications for global trade and economic growth prospects, she notes
The latest tariffs unveiled by the Donald Trump administration yesterday could lead to an overall contraction of around 1% in global merchandise trade volumes this year, the chief of the World Trade Organization (WTO) said in a statement issued today (3 April).
"The WTO Secretariat is closely monitoring and analysing the measures announced by the United States on April 2, 2025," WTO Director General Ngozi Okonjo-Iweala said in the statement.
"Many members have reached out to us and we are actively engaging with them in response to their questions about the potential impact on their economies and the global trading system," he added.
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The recent announcements will have substantial implications for global trade and economic growth prospects, she notes.
"While the situation is rapidly evolving, our initial estimates suggest that these measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections," said the WTO chief.
He said he was deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade.
The WTO chief, however, noted that it is important to remember that, despite these new measures, the vast majority of global trade still flows under the WTO's Most-Favored-Nation (MFN) terms.
"Our estimates now indicate that this share currently stands at 74%, down from around 80% at the beginning of the year. WTO members must stand together to safeguard these gains," reads the statement.
"Trade measures of this magnitude have the potential to create significant trade diversion effects. I call on Members to manage the resulting pressures responsibly to prevent trade tensions from proliferating," it adds.
The WTO was established to serve precisely in moments like this — as a platform for dialogue, to prevent trade conflicts from escalating, and to support an open and predictable trading environment, the statement continues.
The WTO chief called on the organisation's members to utilise this forum to engage constructively and seek cooperative solutions.
