WTO anticipates subdued global merchandise trade growth in 2025 and 2026, with President Trump’s new “reciprocal tariffs” offsetting some of the gains from an improved 2025 outlook. Trade is forecast to expand by 0.9% in 2025—up from April’s -0.2% estimate—driven by a surge in US imports ahead of tariff increases. Growth is expected to ease to 1.8% in 2026, below earlier estimates. Asia will remain the main growth driver, while North America and Europe will drag on trade. Lower oil prices will curb demand in energy-exporting regions.
Although the US-China truce and some tariff exemptions provide limited relief, higher “reciprocal” tariffs introduced in August are expected to weigh heavily on trade. The WTO cautions that ongoing uncertainty threatens business confidence, investment, and global supply chain stability.
The World Trade Organization (WTO) expects sluggish growth in global merchandise trade this year and next, with uncertainty fuelled by President Donald Trump’s tariffs on US imports, though its outlook for 2025 has improved. Higher tariffs, including those implemented this week, are expected to weigh on trade during the latter half of 2025 and into 2026.
The Trump administration has imposed “reciprocal tariffs” on nations it accuses of violating the principles of WTO- the 30-year-old organization that regulates cross-border commerce and discourage excessive tariffs or preferential trade practices.
WTO Director-General Ngozi Okonjo-Iweala stated, “Global trade has shown resilience in the face of persistent shocks, including recent tariff hikes. Frontloaded imports and improved macroeconomic conditions have provided a modest lift to the 2025 outlook. However, the full impact of recent tariff measures is still unfolding. The shadow of tariff uncertainty continues to weigh heavily on business confidence, investment and supply chains. Uncertainty remains one of the most disruptive forces in the global trading environment.“
In its report released on 8 August 2025, the Geneva-based body highlighted that the global goods trade will grow 0.9% this year — a sharp revision from April’s forecast of a 0.2% decline — after a 2.9% increase in 2024. The upward adjustment is largely due to a rush by US importers to stock up on goods, parts, and raw materials before Trump’s higher tariffs take full effect.
According to the WTO, goods trade is expected to grow 1.8% next year, falling short of the 2.5% rebound predicted four months ago.
In 2025, Asian economies are expected to remain the strongest positive driver of global merchandise trade volume growth, though their contribution in 2026 will be lower than the April forecast.
North America will continue to weigh on global trade growth in both 2025 and 2026, but the negative effect in 2025 will be less severe than earlier expected due to stronger-than-forecast frontloading of US imports in the first quarter.
Europe’s 2025 contribution has shifted from moderately positive to slightly negative.
Elsewhere, regions heavily dependent on energy exports will see their positive influence on trade growth decline between 2025 and 2026 as falling oil prices reduce export earnings and curb import demand.
Source: World Trade Organization (WTO)
Table: World merchandise trade volume growth (Annual % change)
North America’s imports are expected to fall by 8.3% in 2025, an improvement from the 9.6% decline forecast in April. This was offset by a stronger-than-expected export surge from Asia, with growth revised up to 4.9% from the earlier estimate of 1.6%.
For Europe, export and import growth in 2025 are expected at -0.9% and 0.4% respectively, both slightly weaker than April’s projections, while North America’s exports are forecast to contract by 4.2%, a smaller drop than previously anticipated.
In April, the WTO projected a -0.2% decline in 2025 trade, based on policies in place as of 14 April, including the suspension of US “reciprocal” tariffs. Later, agreements between the US, China, and the UK lifted the forecast to 0.3%, but higher steel and aluminium tariffs subsequently cut it to 0.1%.
The latest tariff increases, effective 7 August, are expected to put further pressure on trade, partly offset by frontloading and inventory accumulation — both of which will eventually unwind. A more favorable macroeconomic backdrop is also providing some support, though the outlook remains highly uncertain.
WTO noted that the global macroeconomic outlook has improved compared to April’s expectations, aided by the US dollar’s depreciation against other currencies, which should ease financial pressures on developing economies. Lower oil prices are also expected to boost growth in manufacturing-oriented nations, though it may simultaneously reduce import demand in oil-producing regions.
Even so, recent tariff adjustments are set to have an overall negative effect on the global trade outlook relative to April’s forecast. The US-China truce and exemptions for motor vehicles offer some support, but these gains are likely to be outweighed by the impact of higher “reciprocal” tariffs introduced on 7 August, which are expected to increasingly restrain US imports and reduce exports from its trading partners in the second half of 2025 and into 2026.
So far, a wider cycle of tit-for-tat retaliation — which could cause serious harm to global trade — has been averted. The avoidance of a full-scale tariff retaliation is seen as a positive sign, but the risk remains if negotiations falter or political pressures increase.
The WTO Secretariat will, however, continue to monitor developments closely, including evaluating the effects of recent tariff measures on the share of global trade conducted under Most Favoured Nation (MFN) principles. It will also work with members to maintain the stability and predictability that are essential to the global trading system.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.