WTO Sounds Alarm on Global Trade Decline Amid US-China Tariffs
Geneva, Wednesday, 16 April 2025.
The WTO warns of a 1.5% decline in global trade for 2025 due to new U.S. and Chinese tariffs, highlighting growing geopolitical tensions and market instability.
Trade Disruption from Tariffs
Global trade is expected to decline by 1.5% in 2025 according to the World Trade Organization (WTO), following the imposition of tariffs by the United States and China. This announcement comes in the wake of escalating tensions between the two economic giants. The U.S., under President Donald Trump, has increased tariffs on Chinese goods to 145%, while China has retaliated with tariffs up to 125% on U.S. imports [1][2].
Impact on North America and Beyond
The ramifications of these tariffs are significant, particularly in North America, where exports are anticipated to fall by 12.6% this year. The instability caused by these trade measures is likely to extend beyond direct trade relationships between the U.S. and China, impacting global market dynamics [1]. The WTO highlights that the continued imposition of reciprocal tariffs could further reduce world merchandise trade growth by 0.6 percentage points, with the potential for trade policy uncertainty to shave off an additional 0.8 percentage points [2].
Potential for Economic Recovery
Despite the grim forecasts for 2025, there is an expectation of a ‘modest’ recovery in 2026, with trade volumes anticipated to grow by 2.5% [2]. However, the current environment of uncertainty, compounded by trade policies, risks derailing this recovery. U.S. tariffs have also been linked to broader strategic goals aimed at slowing China’s economic rise, indicative of the geopolitical tensions underlining these economic measures [3].
Long-Term Geopolitical Consequences
The ongoing trade war not only strains the U.S.-China relationship but also serves as a proxy for larger geopolitical tensions. As China’s military capabilities expand, with a particular focus on the Indo-Pacific region, the stakes continue to rise. Analysts warn that these economic conflicts may escalate into broader strategic rivalry unless restrained by diplomatic efforts [3][2].