The volume of global merchandise trade is projected to decline by 0.2% in 2025 under current conditions, nearly three percentage points lower than the WTO’s baseline scenario assuming low tariffs, according to the World Trade Organization’s (WTO) Global Trade Outlook and Statistics report released on April 16. The forecast is based on the tariff environment as of April 14, and the WTO warns that trade could contract by as much as 1.5% should the situation worsen.

The report comes at a time of increasing uncertainty for the global economy, with world trade facing mounting headwinds due to a surge in tariffs and rising trade policy volatility. This marks a sharp reversal from 2024, which saw robust growth in global trade.

While services trade is not directly impacted by tariffs, it is also expected to be negatively affected. Global commercial services trade is now forecast to grow by 4.0% in 2025 — slower than previously expected.

“I am deeply concerned by the uncertainty surrounding trade policy, including the US-China stand-off,” said WTO Director-General Ngozi Okonjo-Iweala. “The recent de-escalation of tariff tensions has temporarily relieved some pressure on global trade. However, continued uncertainty risks dampening global growth, with potentially severe consequences — particularly for the world’s most vulnerable economies. WTO members now have a historic opportunity to energize the organization, promote fair competition, streamline decision-making, and modernize trade rules to meet today’s global challenges.”

At the start of 2025, the WTO Secretariat had anticipated continued growth in merchandise and services trade through 2026. However, the introduction of numerous new tariffs since January prompted a significant downward revision of trade forecasts — especially for goods.

ESCALATING RISKS CLOUD THE OUTLOOK

The report highlights several key risks to the 2025 forecast. The reactivation of suspended "reciprocal tariffs" by the United States and the proliferation of trade policy uncertainty could further dampen trade. If both risks materialize, world merchandise trade could shrink by 1.5% — with reciprocal tariffs cutting 0.6 percentage points and uncertainty shaving off another 0.8 points. These scenarios are detailed in the report’s analytical chapter.

“Trade policy uncertainty significantly reduces trade flows, weakens exports, and slows economic activity,” said WTO Chief Economist Ralph Ossa. “Tariffs are a blunt policy tool with broad and often unintended consequences. As trade tensions rise, it is crucial to take a clear-eyed view of these trade-offs.”

REGIONAL TRADE DISPARITIES EMERGE

In contrast to 2024 — when merchandise trade outpaced global GDP growth for the first time since 2017 (excluding the post-COVID rebound) — 2025 is expected to bring regionally divergent impacts due to tariff measures.

North America is forecast to see a steep 12.6% drop in exports and a 9.6% decline in imports. This would subtract 1.7 percentage points from global merchandise trade growth, pushing the overall figure into negative territory. Meanwhile, Asia is projected to register modest export and import growth of 1.6%, while Europe is expected to grow exports by 1.0% and imports by 1.9%. Despite lower-than-baseline performance, these regions are still expected to make a net positive contribution to global trade.

Other regions — especially energy exporters — are also projected to support global trade growth, owing to steady demand for energy products across economic cycles.

The ongoing disruption in US-China trade is expected to trigger significant trade diversion. Chinese exports to all regions outside North America could rise by 4% to 9%, while US imports from China are projected to decline sharply in sectors such as textiles, apparel, and electrical equipment. This shift may create new opportunities for alternative suppliers in third countries.

Least-developed countries (LDCs), particularly those with export profiles similar to China’s, may benefit from this diversion in the short term — especially in textiles and electronics. However, a reinstatement of US tariffs could expose these export-oriented and resource-limited economies to serious external shocks.

SLOWER GROWTH IN SERVICES TRADE

Services trade reached a record 26.4% of global trade in 2024 — the highest level since 2005 — driven by strong demand and accelerating digitalization. Services exports totaled US$ 8.69 trillion in 2024, up 9% year-on-year, mirroring the 2023 increase. This contrasts sharply with goods trade, which grew just 2% in value over the same period.

Despite not being directly targeted by tariffs, services sectors are vulnerable to broader economic impacts. Declining goods trade is expected to suppress demand for related services such as freight, port logistics, and air cargo. International travel, particularly leisure travel, may also decline due to reduced discretionary spending. Additionally, demand for intermediate services — including professional, R&D, and IT services — is likely to weaken.

Most of the expected growth in services trade in 2025 will come from Europe, where exports are projected to rise by 5.0%. Asian economies are forecast to see 4.4% growth, while North America’s services exports will slow to 1.6%. Modest gains are also expected in the Middle East (1.7%) and the Commonwealth of Independent States (1.1%). In contrast, services trade in Africa and in South and Central America and the Caribbean is expected to decline in 2025.