Global trade takes a hit — and China rethinks its strategy

As trade tensions escalate and tariffs pile up, the World Trade Organization has slashed its 2025 forecast for global commerce.

Tariffs are rising, tensions are simmering, and the flow of goods across borders is slowing. The World Trade Organization warns that Trump's tariffs have sharply deteriorated the global trade outlook. China, once the world’s unstoppable export machine, is now forced to find new buyers. The United States, still the top importer, is rethinking what it brings in and from where.

What’s new: The World Trade Organization has slashed its 2025 forecast for global merchandise trade, now expecting a 0.2 per cent decline due to mounting tariffs and trade tensions.

Why it matters: Global economic recovery may stall further as key trading nations, especially China, the US, and Canada, struggle to navigate growing uncertainty and shifting supply chains.

IN NUMBERS

• Projected decline in 2025 world trade volume: –0.2 per cent
• Estimated loss without current tariff levels: nearly three percentage points higher
• Worst-case projection if tensions worsen: –1.5 per cent
• Commercial services trade growth forecast: 4.0 per cent in 2025, down from 6.8 per cent in 2024
• China exports (2024): $3.6 trillion
• US imports (2024): $3.4 trillion

In-depth: Without the US-led trade war, the WTO says trade would have grown nearly three percentage points higher — a sharp cost of rising protectionism. “Together, reciprocal tariffs and spreading trade policy uncertainty would lead to a 1.5 per cent decline in world merchandise trade in 2025, the WTO noted.

The knock-on effects are already visible across economies. North America is expected to take the hardest hit, with demand dampened by rising import costs and retaliatory measures. Europe and Asia will fare better, but gains are projected to be modest and not enough to offset global losses.

Big picture: The WTO expected 2025 trade to grow with global GDP, but new tariffs from major economies forced a reassessment. The slowdown in goods and services trade signals a global economic shift. China was the top exporter in 2024, with $3.6 trillion in goods. The US was the largest importer, with $3.4 trillion in purchases.

What they said: “WTO members have the unprecedented opportunity to inject dynamism into the organisation, foster a level-playing field, streamline decision-making, and adapt our agreements to better meet today’s global realities,” said Ngozi Okonjo-Iweala, the WTO’s Director-General.