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Global Trade to Shrink in ’25 Due to US Tariff War: WTO

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WTO Trade Forecast Update

Merchandise Trade Forecast

  • 2025 Forecast: Volume of world merchandise trade to decline by 0.2%, a reduction from an earlier 2.7% growth prediction.
  • 2026 Outlook: Trade is expected to rebound by 2.5%.
  • Impact of US-led Trade War: Almost three percentage points lower trade volume in 2025 than it would have been without the trade war.

Regional Impact

  • North America: Exports projected to drop by 12.6% in 2025, with a negative contribution of 1.7 points to global trade growth.
  • Asia and Europe: Positive contribution to global trade; however, Asia's contribution is halved to 0.6 points.
  • Other Regions: Combined contribution from Africa, CIS, West Asia, and South and Central America remains positive, though reduced.

Trade Policy and Tariffs

  • US Tariff Suspension: Reciprocal tariffs suspended for 90 days until July 9 for over 70 countries.
  • Downside Risks: Potential for an even sharper decline of 1.5% in global goods trade due to policy uncertainty.

Country-Specific Insights

  • India:
    • Global merchandise exports at 1.8% share in 2024; imports at 2.8%.
    • Rank dropped to 14th among leading merchandise exporters with a 2.2% share.
    • Ranked seventh among major merchandise importers with a 3.4% share.
    • Share in commercial services exports fell to 5.3% in 2024 from 5.4%.
  • China:
    • Merchandise exports projected to rise by 4-9% outside North America.
    • US imports from China expected to decline in textiles, apparel, and electrical equipment.

Commercial Services Trade

  • 2025 & 2026 Growth: Global volume expected to grow by 4% in 2025 and 4.1% in 2026, below baseline projections of 5.1% and 4.8%.
  • Impact of Tariffs: Weaker demand for transport and logistics services; broader uncertainty reduces discretionary spending on travel and investment services.

Global Economic Growth

  • 2025 GDP Prediction: Growth at market exchange rates expected to be 2.2%, 0.6 percentage points below the no-tariff-change baseline.
  • 2026 Recovery: GDP growth to slightly improve to 2.4%.
  • Regional Impacts: Largest GDP impact in North America (-1.6 points), followed by Asia (-0.4 points).
  • Tags :
  • WTO
  • Merchandise Trade
  • Commercial Services Trade
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