World merchandise trade volume is expected to decline by 0.2% in 2025, according to the World Trade Organization’s Global Trade Outlook and Statistics report released on April 16. The revised forecast is nearly three percentage points lower than projections under a low-tariff baseline scenario.
The WTO warned that trade could shrink further, down to -1.5% in 2025, if trade tensions escalate. Commercial services trade is also expected to grow more slowly, with a revised forecast of 4.0% growth in 2025.
“This is premised on the tariff situation as of April 14. Trade could shrink even further, to -1.5% in 2025, if the situation deteriorates,” the report said.
The downgrade follows an increase in tariffs introduced since January, prompting a reassessment of the trade outlook. Director-General Ngozi Okonjo-Iweala cited continued trade policy uncertainty, particularly between the US and China, as a key concern.
“The enduring uncertainty threatens to act as a brake on global growth,” Okonjo-Iweala said. “WTO members have the opportunity to inject dynamism into the organization and adapt our agreements to better meet today’s global realities.”
The WTO noted that its original forecast anticipated global merchandise trade growing in line with GDP, and services trade expanding at a faster pace. In 2024, merchandise trade volume had grown by 2.9%, slightly above the 2.8% growth in global GDP.
Risks to the trade outlook include the potential reactivation of suspended reciprocal tariffs by the US and the broader spread of trade policy uncertainty. If these risks materialise, global merchandise trade could decline by as much as 1.5% in 2025, the WTO said.
According to the report, reactivated reciprocal tariffs could reduce trade volume by 0.6 percentage points, while rising uncertainty could reduce it by another 0.8 percentage points.
“Trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity,” said Ralph Ossa, WTO Chief Economist. “Tariffs have wide-ranging, and often unintended consequences.”
The report also suggests that the impact of tariffs on trade in 2025 will vary significantly across regions.
While the current forecast reflects the situation as of mid-April, the WTO cautioned that additional changes to trade policy could further alter the outlook. The risks to services trade from increased tensions are not currently factored into the forecast.
