Nigeria: WTO Slashes Global Trade Outlook On Trump Tariff Disruptions
Abuja — The World Trade Organization (WTO) has slashed its forecast for merchandise trade this year as soaring US tariffs and broader uncertainty hammer international commerce.
The Geneva-based WTO expects the volume of world merchandise trade to decline by 0.2 per cent in 2025 — almost three percentage points lower than it would have been without the US-led trade war, marking a dramatic reversal from expectations at the start of the year. Trade is forecast to rebound by 2.5 per cent in 2026.
The flow of goods and services around the world, which went through a tumultuous period during the Covid pandemic, had only recently returned to normal patterns before Donald Trump was elected US president in November.
Two weeks ago, Trump announced so-called reciprocal import taxes ranging from 10 per cent to 50 per cent, though days later he suspended the highest rates for 90 days and kept 10 per cent as the floor for all countries except China, whose exports to the US now face duties in excess of over 100 per cent.
In the WTO’s forecasts, this year’s contraction will be even worse if the US pushes ahead with those higher levels of reciprocal tariffs. “Together, reciprocal tariffs and spreading trade policy uncertainty would lead to a 1.5 per cent decline in world merchandise trade in 2025,” the WTO said in its report, quoted by Bloomberg.
While protectionist policies may boost domestic production, raise revenue and narrow trade imbalances — all three of which are Trump’s stated goals — the WTO said that “over the medium to long term, higher import tariffs generally have an overall net negative effect on economic activity and trade.”
In response to Trump’s measures, China has retaliated with levies of its own, as well as other measures targeting US companies and restricting access to exports of critical raw materials.
The WTO cautioned that a cycle of tit-for-tat responses could lead to a higher cost of living.
“Retaliatory measures in response to restrictive trade policies — such as tariffs on specific, difficult-to-substitute materials or intermediate goods — could have an outsized impact on inflation, or at least inflation expectations,” the trade body said in its report.
By This Day.
