WTO Reports Global Trade Decline Due to US Tariffs

The World Trade Organization (WTO) and global economic leaders have issued increasingly stark warnings about the negative consequences of President Donald Trump’s new tariff policies. The WTO projects global merchandise trade will contract by 0.2% in 2025, with potential for a much sharper 1.5% decline if reciprocal tariffs and trade policy uncertainty persist. Japan's finance minister and other international officials fear these tariffs could disrupt global financial markets and undermine economic recovery, especially in export-driven economies. The WTO also notes that while protectionist policies might aim to address trade imbalances or boost domestic production, higher tariffs tend to have a net negative effect on trade and economic activity over the medium to long term. North America is expected to be hit particularly hard, with a forecasted 12.6% drop in exports, and least developed, export-oriented nations face heightened risks. Ongoing trade negotiations, such as those between the US, Japan, and India, are seen as crucial to mitigating the fallout and restoring stability.