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The World Trade Organization (WTO) has issued a warning that global trade could decrease this year as a result of the tariffs on imported goods enacted by US President Donald Trump.
It indicated that "severe downside risks," such as retaliatory tariffs and political instability, might result in a more pronounced decline in global goods trade and potentially cause lasting damage.
The WTO projected that trade in North America may decline by more than 10%. Director-General Ngozi Okonjo-Iweala voiced concerns about the 'decoupling' of the US and China, labeling it as a 'really worrying phenomenon.'
The WTO, which had previously anticipated a 2.7% increase in global goods trade by 2025, now predicts a 0.2% decline. Despite this grim outlook for US trade, some regions are still anticipated to experience growth.
According to the WTO, both Asia and Europe are expected to achieve modest increases in exports and imports this year.
"The overall impact on world trade growth from other regions is also expected to be positive," the report stated. For the first time, the report includes a forecast for services trade, which involves countries exchanging services instead of goods.
The WTO predicts that services trade will grow by 4% in 2025, approximately one percentage point below earlier expectations.
Chief economist Ralph Ossa remarked, "Tariffs are a policy tool that produces wide-ranging and often unintended effects. Our simulations indicate that uncertainty in trade policy significantly dampens trade flows, curtailing exports and weakening economic performance."
Additionally, on Wednesday, the UN trade and development agency, UNCTAD, released a report forecasting a slowdown in global growth to 2.3% in 2025 due to mounting trade tensions and uncertainty.
This figure falls below the "2.5% threshold that is often seen as indicating a global recession." A baseline 10% tariff on nearly all foreign imports to the US was implemented on April 5, although certain countries and products are exempt. China faces far steeper tariffs, totaling 145% on most goods.
The US stock market opened lower on Wednesday, with major indices declining amid the ongoing climate of uncertainty.
