The World Trade Organization has issued a stark and data-driven warning that the dramatic escalation of tariff policy under Donald Trump’s renewed economic agenda is set to reverse the direction of global trade in 2025, thereby constraining international economic growth and destabilizing the global trading system. WTO’s latest analysis, headquartered in Geneva, reflects a deep deterioration in the international trade environment, as protectionist impulses once again gain dominance over multilateral cooperation.
Previously forecasting a robust expansion of goods trade at 2.7% for the year, the WTO has now downgraded its expectations to a 0.2% contraction, with the core reason cited being the trade policy implemented by the United States under Trump’s leadership. Most critically, the trade relationship between the United States and China—the two largest economies and principal trade rivals—is forecast to collapse by a staggering 81%, and potentially up to 91% should exemptions for high-tech sectors like smartphones and semiconductors be eliminated. WTO Director-General Ngozi Okonjo-Iweala described this severe contraction as indicative of full-scale economic decoupling, signaling the potential unraveling of one of the most significant economic interdependencies of the 21st century. She emphasized the gravity of the situation, expressing acute concern over the “far-reaching consequences” such a rupture will have on the global system of trade and production.
This forecasted unraveling of the US-China trade corridor is accompanied by a comprehensive reassessment of global economic performance. The WTO’s report revises global GDP growth projections for 2025 downward from an earlier 2.8% to a significantly weaker 2.2%, directly linking this decline to the surge in unilateral tariffs and the accompanying uncertainty surrounding future trade policy. As of this year, the United States has imposed a universal 10% tariff on all imports and levied sector-specific and China-targeted duties that cumulatively amount to 145%. The WTO anticipates the most acute disruption will affect trade flows to and from the United States itself, while other world regions may, in the near term, maintain modest growth trajectories in trade.
Despite the current imposition of these measures, a temporary suspension of Trump’s proposed “reciprocal” tariffs—seen as even more severe—was enacted last week, following a volatile reaction in global financial markets. The pause, lasting 90 days, has provided only fleeting relief, as the WTO’s projections indicate that reinstating these measures would result in a 0.8% further decline in global goods trade. More alarmingly, should a wider climate of policy instability take hold, as states respond by adjusting their own trade frameworks, the WTO warns of a potential 1.5% contraction in trade and a dramatic dip in global GDP growth to just 1.7%, a level reminiscent of post-crisis stagnation.
Crucially, the WTO’s report emphasizes that it is not merely the tariffs themselves, but the uncertainty surrounding trade policy that may prove most economically corrosive. Inconsistent messaging from Washington following Trump’s symbolic “liberation day” tariff announcement on 2 April has introduced layers of ambiguity into markets, prompting firms to delay investment and reorient supply chains in ways that are neither efficient nor sustainable. The WTO emphasized that “uncertainty fosters an increased prudence in decision-making,” with significant empirical evidence suggesting that it erodes business confidence, reduces capital formation, and inhibits the kind of long-term planning essential to international commerce.
Services trade, while not directly subject to tariffs, is expected to suffer collateral damage. Declines in goods trade reduce demand for associated services such as logistics, shipping, and freight. Moreover, heightened macroeconomic instability curbs consumer confidence, dampens spending on discretionary travel, and restricts flows of investment into professional and technical services. The indirect effects thus threaten to compromise broad swathes of the international service economy, a sector increasingly vital to both developed and emerging markets.
The anticipated disruption is expected to lead to notable shifts in trade geography. As the United States turns inward, Beijing is projected to seek compensatory markets elsewhere, with Chinese exports to non-North American regions forecast to rise by between 4% and 9% in 2025. This trade diversion strategy, however, cannot fully mitigate the systemic risks posed by decoupling, especially considering the foundational role US-China exchange has played in sustaining global supply chain efficiency and integrated manufacturing ecosystems.
Fundamentally, Trump’s tariff regime flagrantly violates the WTO’s foundational principles, particularly the “most favoured nation” clause, which mandates equal treatment for all trading partners. By targeting China with disproportionately high tariffs, Washington undermined the multilateral basis of international trade, weakening the legitimacy of the WTO itself as a neutral arbiter. The organization, long tasked with managing global trade rules and facilitating dispute resolution, finds its authority increasingly under strain in the face of unilateralism and systemic divergence.
In response, China has formally petitioned the WTO to initiate an investigation into the legality and broader impact of the Trump administration’s tariffs. In a recent submission to the body, Chinese officials condemned the policy as fundamentally self-defeating, warning that “reciprocal tariffs are not – and will never be – a cure for trade imbalances,” but rather, instruments that “will backfire, harming the US itself.”
The WTO is now in the process of surveying its member states on whether to convene an emergency session to deliberate on the rapidly evolving situation, acknowledging that the scope and speed of the changes now underway represent a structural threat not only to the postwar trading order but to global economic stability as a whole.
Gros News 
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