World Trade Organization says global trade could slide this year because of Trump’s tariff policies

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GENEVA (AP) — The World Trade Organization says the volume of trade in goods worldwide is likely to decrease by 0.2% this year due to U.S. President Donald Trump’s shifting tariff policies and a standoff with China, but it would take a more severe hit if Trump carries through on his toughest “reciprocal” tariffs.

The decline in trade will be particularly steep in North America even without the stiffest tariffs, the global trade forum said Wednesday, with exports there this year expected to fall by 12.6% and imports by 9.6%.

The WTO based its report on the tariff situation as of Monday. Initially, 2025 and 2026 were expected to have continued expansion of world trade, but Trump’s trade war forced WTO economists to substantially downgrade their forecast, the forum said.

Trade in goods worldwide would slump by 1.5% if Trump follows through on his stiffest tariffs on most nations, due to the uncertainty unsettling businesses.

Trump suspended the toughest set of tariffs for 90 days earlier this month so more than 70 countries have a chance to address U.S. trade concerns. Meanwhile, he is increasing taxes on Chinese imports to 145% and engaging in a lengthy back and forth with Canada and Mexico about tariffs on their goods.

Despite the 90-day pause, “the enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, the most vulnerable economies in particular,” WTO Director-General Ngozi Okonjo-Iweala said in a statement.

“Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity,” WTO chief economist Ralph Ossa said in the statement. “Moreover, tariffs are a policy lever with wide-ranging and often unintended consequences. In a world of growing trade tensions, a clear-eyed view of those trade-offs is more important than ever.”