U.S. tariffs could lead to decline in global trade – WTO

The Director-General of the World Trade Organization, WTO, Dr. Ngozi Okonjo-Iweala, has said the recent tariffs announced by the United States of America, USA, will have substantial implications for global trade and economic growth prospects.

Okonjo-Iweala who said this in a statement she issued on Thursday in reaction to recent tariffs imposed on goods from other countries by US President Donald Trump.

The WTO D-G added that the organisation is closely monitoring and analysing the measures announced by the United States on April 2, 2025.

She added that many members have reached out to the WTO and the organization is actively engaging with them in response to their questions about the potential impact on their
economies and the global trading system.

“While the situation is rapidly evolving, our initial estimates suggest that these measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections. I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade,” the WTO DG said of the potential effects of the U.S. tariffs.

She, however, noted that despite the emerging tariffs war, the vast majority of global trade is still being conducted under the WTO’s Most-Favored-Nation (MFN) terms.

“Our estimates now indicate that this share currently stands at 74%, down from around 80% at the beginning of the year. WTO members must stand together to safeguard these gains.”

Nevertheless, Okonja- Iweala urges caution while advising members to utilise the platform of WTO to prevent the tariff war from escalating.

“Trade measures of this magnitude have the potential to create significant trade diversion effects. I call on Members to manage the resulting pressures responsibly to prevent trade
tensions from proliferating.

“The WTO was established to serve precisely in moments like this — as a platform for dialogue, to prevent trade conflicts from escalating, and to support an open and predictable trading
environment. I encourage Members to utilize this forum to engage constructively and seek cooperative solutions.”