WTO Warns of US Tariff Disruption as Global Trade Surges
The World Trade Organization (WTO) has issued a new trade forecast, highlighting significant shifts in global commerce. WTO Director-General Ngozi Okonjo-Iweala has labelled US bank policies as the most disruptive trade event in eight decades.
The WTO has revised its trade in goods forecast for 2025 to a robust 2.4% growth, driven by a strong first half of the year. However, it has also lowered its 2026 forecast to a modest 0.5% growth. This adjustment reflects businesses accelerating their activities in response to US bank threats.
Global trade in goods has seen a significant surge in the first half of 2025. Notably, trade in AI-related goods, such as semiconductors, servers, and telecommunications equipment, has also witnessed a substantial increase. Despite these shifts, three-quarters of world trade continues to adhere to negotiated rules, with few retaliatory measures from other countries.
The WTO has also revised its forecasts for major economies' trade. US goods exports are now expected to decline by 3.1% in 2025, an improvement from the previously forecasted -12.6%. European exports are predicted to grow by 0.7%, slightly lower than the earlier estimate of 1.0%.
The few countries that have retaliated against US bank policies include Canada, Mexico, and the European Union, among others. Canada and Mexico have implemented emergency tariffs but also granted exceptions. The EU and other countries have responded with reciprocal tariffs and free trade deal proposals.
The WTO's latest forecast underscores the complex dynamics at play in global trade. While the first half of 2025 saw significant growth, the outlook for 2026 suggests a slower pace. The US bank policies, despite being labelled as the most disruptive in 80 years, have not led to widespread retaliation. However, the few retaliatory measures implemented have added another layer of complexity to international trade.
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