WTO Warns of Major Trade Decline Due to New Tariffs 📉

The World Trade Organization (WTO) has significantly lowered its forecast for global merchandise trade growth this year, citing the impact of tariffs, particularly those initiated by the United States.

Key Points

• Trade Growth Forecast: The WTO now projects a 0.2% decline in global merchandise trade for this year, a sharp contrast to the 3.0% increase it predicted in October.
• Tariff Impact: Recent tariffs, including those on steel and automobiles, are already factored into this revised forecast.
• Further Decline Possible: If the U.S. were to reinstate previously suspended reciprocal tariffs, global trade growth could fall by an additional 1.5%, marking the largest trade decline since the COVID-19 pandemic in 2020.
• U.S.-China Decoupling: WTO Director-General Ngozi Okonjo-Iweala expressed concerns about the decoupling of the U.S. and Chinese economies, warning it could lead to significant geopolitical and economic fragmentation.

Potential Economic Impact

Okonjo-Iweala highlighted that a U.S.-China decoupling could reduce global GDP by 7% in the long term, illustrating the severe consequences of such economic division.

WTO’s Perspective

The WTO noted that the current trade policy shifts are unprecedented, requiring a cautious interpretation of their forecasts. They anticipate a moderate recovery of 2.5% in trade growth next year.

In summary, the WTO’s report underscores the significant risks that escalating trade tensions and tariffs pose to global economic stability and growth. The potential for a major trade downturn looms if current policies continue or escalate. 🌍