The World Trade Organization (WTO) has warned that US President Donald Trump’s latest tariff measures could result in a 1% contraction in global merchandise trade volumes this year, adding fresh concerns over the potential escalation of trade wars.
WTO Director-General Ngozi Okonjo-Iweala said on Thursday that the organization is closely monitoring the impact of the US administration’s tariff policies. “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 in 2025,” she stated. This marks a downward revision of nearly four percentage points from the WTO’s previous trade projections.
On Wednesday, April 2, President Trump announced a sweeping increase in import tariffs, imposing a 10% duty on all nations and significantly higher levies on imports from key trade partners, including China and the European Union. The move follows a series of tariff hikes implemented since his return to office in January.
These measures have sparked fears of a full-scale trade war, with experts warning that retaliatory actions from affected countries could further dampen global trade and economic growth.
Okonjo-Iweala cautioned against a cycle of retaliatory tariffs, urging WTO members to approach the situation responsibly. “I’m deeply concerned about this decline and the potential for escalation,” she said, emphasizing the need for dialogue and cooperation to prevent further disruptions.
Despite the aggressive tariff hikes, the WTO chief pointed out that the majority of global trade continues to operate under the organization’s Most-Favoured-Nation (MFN) status, which prevents discrimination between trading partners. However, this share has now dropped to 74% from 80% at the start of the year, reflecting the increasing impact of unilateral trade restrictions.
“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,” Okonjo-Iweala said.
