Global Merchandise Trade Volumes Could Shrink By 1

Following the recent raft of tariffs announced by the White House, the World Trade Organization has painted a gloomy picture of their impact on world trade.

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 this year. This would represent a downward revision of nearly four percentage points from previous projections.

Director-General Ngozi Okonjo-Iweala said the WTO Secretariat was closely monitoring and analysing the measures announced on April 2.

Many members have reached out to us, and we are actively engaging with them in response to their questions about the potential impact on their economies and the global trading system, she said.

The recent announcements will have substantial implications for global trade and economic growth prospects. While the situation is rapidly evolving, I'm deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade.

She said it was important, however, to remember that despite these new measures, the vast majority of global trade still flowed under the WTO's Most-Favored-Nation MFN terms.

Our estimates now indicate that this share currently stands at 74, down from around 80 at the beginning of the year. WTO members must stand together to safeguard these gains.

Trade measures of this magnitude have the potential to create significant trade diversion effects. I call on members to manage the resulting pressures responsibly to prevent trade tensions from proliferating.

She added that the WTO had been 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.

I encourage members to utilise this forum to engage constructively and seek cooperative solutions.