WTO forecasts on trade

Temporary tariff pause mitigates trade contraction, but there is still strong risks of deterioration

• Under current conditions, the volume of world trade in goods is likely to decrease 0.2% in 2025. The decrease is expected to be particularly accused in North America, where exports are forecast to fall by 12.6%.
• However, there are serious risks of deterioration, such as the application of “reciprocal” tariffs and broader indirect effects of uncertainty in policies, which could lead to an even more pronounced decrease – of 1.5% – in the world trade in goods and harm the less advanced countries oriented to export.
• The report contains, for the first time, a provision of the trade of services, which complements its projections related to merchandise trade. It is expected that the volume of the trade of services will grow 4.0% in 2025, around 1 percentage point less than expected.

It is expected that the volume of world merchandise trade decreases 0.2% in 2025, taking into account the current conditions, which represents almost three percentage points less than what would have been planned in a reference scenario of “Low tariffs”, as indicated in the most recent edition of the World Trade and Statistics Edition, of the WTO Secretariat, published on April 16. These forecasts are based on the tariff situation as of April 14. If the situation deteriorated, trade could contract even more, up to -1.5%, in 2025.

The trade of services is also expected to be negatively affected, although it is not directly subject to tariffs, and the current prognosis of the global volume of commercial services is 4.0%, less than expected.

The general director Ngozi Okonjo-Iweala declared: “I am deeply concerned with uncertainty in relation to commercial policies, including confrontation between the United States and China. The recent attenuation of tariff tensions has temporarily relieved part of the pressure on world trade. However, persistent uncertainty threatens to act as a brake of world growth, with serious negative consequences for the world Most vulnerable economies.

At the beginning of the year, the WTO Secretariat expected to attend world trade in 2025 and 2026, with a goods growth of merchandise in line with that of world GDP and a more intense growth in the trade of commercial services. However, the large number of new tariffs introduced since January brought WTO economists to reassess the situation of trade, which resulted in a substantial reduction of their forecasts for merchandise trade and a lower reduction than those related to services trade.

Risks that affect forecasts

The forecasts of the merchandise trade continue to be subject to risks, in particular those derived from the reactivation of the “reciprocal tariffs” suspended by the United States, as well as the propagation of uncertainty in commercial policies that could affect commercial relations between economies other than that of the United States. If applied, reciprocal tariffs would reduce the growth of world merchandise trade in 0.6 percentage points in 2025 and uncertainty in commercial policies could reduce it by other 0.8 percentage points. Together, reciprocal tariffs and the propagation of uncertainty in commercial policies would lead to a 1.5% decrease in world merchandise trade in 2025. These scenarios are analyzed in a detailed way in the analytical chapter of the report. Currently, the risks for the trade of services related to the escalation of commercial tensions are not taken into account in the forecast.

According to the chief economist of the WTO, Ralph Ossa, “our simulations show that the uncertainty in commercial policies has an important attenuating effect of commercial currents, which reduces exports and weakens economic activity. In addition, tariffs are an instrument of policy with wide consequences already often unforeseen. In a world with growing commercial tensions, it is more important than ever to clearly perceive these effects against these effects.”

Forecasts related to regional merchandise trade

The most recent forecast indicates a change in trend compared to 2024, when the volume of world merchandise trade grew 2.9%, while GDP increased by 2.8%, which 2024 was the first year since 2017 (excluding the rear rebound to the Covid-19 Pandemic) in which the merchandise trade grew more quickly than production.

In 2025, the recent tariff measures are expected to produce effects on the trade of very different goods in the different regions.

In the current policy panorama, Exports are expected in North America to decrease 12.6% in 2025 and that imports decrease 9.6%. The results in the region would involve a reduction of 1.7 percentage points of world merchandise trade in 2025, so that the global figure would go to negative values. It is expected that in Asia this year moderate growths of exports and imports (both of 1.6%) will be registered, as in Europe (1.0%export growth, import growth of 1.9%). The contributions of both regions to the growth of world trade would continue to be positive within the framework of current policies, although lower than in the reference scenario of low tariffs. The collective contribution of other regions to the growth of world trade would also continue to be positive, due in part to its importance as producers of energy products, whose demand tends to be stable throughout the world economic cycle.

The disturbance of trade between the United States and China is expected to cause important deviations from commercial currents, which raises concerns in third markets for the increase in China’s competition. Trade deviations are expected to give rise to 4% to 9% of China’s export exports to the other different regions of North America. At the same time, it is expected that imports from the United States from China decrease accusily in sectors such as textiles, that of clothing and that of electrical equipment, which will generate new export opportunities for other suppliers capable of filling that deficit.

In addition, the restoration of the tariffs of the United States could have serious repercussions for the less advanced countries (PMA) oriented to export, whose economies are particularly sensitive to external economic disturbances, because their trade is concentrated in a small number of products and the scarce resources available to deal with the setbacks. In the current situation, with the pause in the “reciprocal” tariffs of the United States, the PMAs can benefit from the deviation of trade, since their export structure is similar to that of China, especially as regards textile and electronic products.

Commercial Services Trade

In 2024, the services represented 26.4% of world trade based on the statistics of the balance of payments, the highest proportion since 2005. The increase in demand for services and advances in digitalization have facilitated the growth of the contribution of services to world trade. In 2024, the service of services amounted to 8.69 billion dollars USA, which represents a 9%increase, similar to the growth recorded in 2023. This significantly contrasts with the merchandise trade, which increased only 2%, in terms of value, in 2024.

Although high tariffs are limited to goods, their effects are expected to have an impact throughout the economy, including services.

High tariffs will directly affect the volume of goods subject to trade, which will weaken the demand for cargo and logistics transport services in ports and airports, which travels most of the global transport. International trips, particularly leisure trips, can be the first sector affected by economic uncertainty, since discretionary spending on transfers and accommodations can be easily reduced. In addition, in the current economic environment, the demand for various intermediate services that supports the trade of goods and other services, such as professional, research and development and information technology services will probably reduce.

Most of the growth of services in 2025 will come from Europe, where exports are expected to increase 5.0% with current policies. European growth will remain at 4.4% in 2026. SERVICES EXPORTS OF ASICAL ECONOMY 1.7% in 2025 and 1.0% in 2026. In the community of independent states (CEI), 1.1% growth in 2025 and 3.5% in 2026 is expected in 2026. Perspectives for Africa and South America, Central America and the Caribbean in 2025 are unfavorable, and it is expected that descents are recorded in both regions in 2025.