The rates imposed by Donald Trump will lead to a reversal of international trade flow this year and will brake the global economic growth, warns the World Trade Organization (WTO).
Trump's taxes will seriously affect international trade in 2025 photo archive
In his latest report on the global commercial system, the Institution based in Geneva states that previously estimated a healthy 2.7% increase in goods trade in 2025. As a result of Washington's commercial policies, the current forecast indicates a decline of 0.2%, The Guardian reports.
The general director of the WTO, Ngozi Okonjo-iweala, said she was particularly worried about “Decoupling” between the US and China, a phenomenon that he qualified right “Very worrying.”
She said that trade between the two great geopolitical powers could decrease by 81% – 91% in the absence of technological products such as smartphones – a situation that is equivalent to an economic decoupling between the two states and will have “large consequences ”.
Okonjo-Iwaala mentioned that the WTO is currently consulting with the member countries to decide whether it is necessary to convene an emergency reunion to discuss this situation.
Gloomy perspectives
In the report, the organization states: “The prospects for global trade have suddenly deteriorated due to the increase of tariffs and uncertainty about commercial policies.” If previously expected at a 2.8% increase in the global GDP in 2025, the estimation was now revised to a modest 2.2%.
The US imposed 10% rates for all imports, and in the case of China, they reach 145%, with emphasis on sectors such as cars and steel. WTO estimates that the main impact of this policy will be a marked decrease in trade with the US – while other regions will continue to increase.
Rates “Mutual” Trump's much bigger was suspended last week for 90 days, after a violent reaction on financial markets. WTO warns that if they are reintroduced after this break, the impact would be even higher, leading to a 0.8% decrease in global trade.
Emphasized decline
In a more pessimistic scenario, in which the uncertainty about commercial policies would accentuate globally, as other countries change their own reaction policies, WTO estimates an even more pronounced decline of 1.5% of world trade. In this extreme case, the growth of the global GDP would decrease to only 1.7%.
After the announcement made by Trump on April 2, called “The Day of Liberation”followed by a series of contradictory statements from Washington, WOC warns that uncertainty itself becomes a major risk factor for economic slowing.
“The uncertainty generates increased caution in making decisions”states OMC, indicating evidence that “Uncertainty in commercial policies can, among other things, affect business confidence, reduce investments and thus affect economic growth.”
The organization adds: “Finally, the ability of companies to manage this uncertainty will be essential to determine if the positive macroeconomic impulse observed in 2024 will translate into a sustained growth of global trade in the coming years.”
OMC plays a “Reorientation” of trade, in the context in which China is looking for new markets outside the US. Chinese exports to regions outside North America could increase by 4% – 9% in 2025.
Trump's rates were applied with the total ignorance of the principle “The nation of the most favored” – The cornerstone of the system supervised by the WTO – which stipulates that the commercial advantages granted to one member country must be extended to the others.
China has asked the WTO to investigate the impact of Trump's tariffs. Beijing transmitted last week that “Mutual tariffs are not – and they will never be – a solution for commercial imbalances. On the contrary, they will return against the US and bring them damage.”
