WTO sounds the alarm! Trump's tariffs will turn this year's global merchandise trade growth from 2.7% to a decline of 0.2%

According to the latest warning from the World Trade Organization (WTO), the Trump administration's radical tariff policy will lead to a contraction in global trade by 2025, which will not only severely impact the global business environment but also significantly lower global GDP growth expectations.

In the global trade system report released on Wednesday, the WTO adjusted its forecast for this year's global goods trade volume from an initial growth of 2.7% to a decline of 0.2%, a full three percentage points down. The WTO also lowered its 2025 global GDP growth forecast from 2.8% to 2.2%, highlighting the drag that the trade war has on the overall economy.

If the U.S. pushes for a higher level of so-called "reciprocal tariffs," this year's trade contraction will be even more severe. The WTO warned in its report on Wednesday:

If this is followed by a surge in global "trade policy uncertainty," and other countries adjust their policies accordingly, trade volumes will further decline by 1.6%. In this worst-case scenario, the WTO predicts that global GDP growth will further slow to just 1.5%.

According to CCTV News, the U.S. has imposed a 10% tariff on all imported goods, with even higher rates on specific industries such as automobiles and steel. Although the White House has implemented a 90-day tariff suspension for some countries, if tariffs are reinstated after 90 days, the WTO warns that global trade will face a 0.8% decline.

WTO analysis shows that trade in North America will be hit the hardest, while Asia and Europe are expected to maintain moderate growth.

Although service trade is not directly affected by Trump's tariffs, it will also suffer indirect impacts. For example, in the tourism industry, according to earlier reports from Global Times, the willingness of tourists from multiple countries to travel to the U.S. has decreased due to the U.S. government's trade war and incidents where some tourists were detained upon entering the U.S., causing deep concern among U.S. tourism operators.

The WTO predicts that global business services will grow by 4% this year and by 4.1% in 2026, far below last year's growth rate of 6.8%.

The decline in goods trade due to tariffs has weakened demand for related services such as transportation and logistics, while broader uncertainty has suppressed discretionary spending on tourism and slowed investment-related services.

It is noteworthy that since April 2, Trump's statements have been inconsistent and often contradictory. In this regard, the WTO warned that uncertainty itself has become an important factor in the economic slowdown.

"Uncertainty increases caution in decision-making," the WTO stated, with evidence showing that "trade policy uncertainty can undermine business confidence, reduce business investment, and thus harm economic growth."