WTO Warns of Global Recession Risk as 2025 Trade Forecast Turns Negative Amid U.S.–China Tariff Clash
WTO Warns of Global Recession Risk as 2025 Trade Forecast Turns Negative Amid U.S.–China Tariff Clash
Geneva, April 24, 2025 — The World Trade Organization (WTO) has slashed its 2025 global trade growth forecast, citing escalating tariff tensions between the United States and China. The organization now expects global merchandise trade to contract by 0.2%, a sharp downgrade from its previous forecast of +2.7%, due primarily to the U.S. administration’s aggressive trade policies.
WTO Director-General Ngozi Okonjo-Iweala voiced deep concerns about growing economic polarization between the world’s two largest economies. She warned that without tariff exemptions on core goods such as smartphones, bilateral trade between the U.S. and China could plunge by as much as 91%, with spillover effects across global economic activity.
📉 Broad-Based Impact on Global Trade and GDP
- Global trade volume: Revised from +2.7% to -0.2%
- Global GDP: Lowered from 2.8% to 2.2%
- Worst-case scenario: Retaliatory tariffs could shrink trade by 0.8% and drag global GDP growth down to 1.7%
🛃 Trump’s Tariff Push Fuels Economic Uncertainty
On April 2, President Donald Trump declared a new wave of tariffs under the banner of “Freedom Day,” imposing:
A 10% blanket tariff on all imports
A 145% tariff on Chinese goods
Additional duties on automobiles, steel, and other select sectors
Although the U.S. has paused some of these tariffs for 90 days, the WTO cautions that resuming such policies without tangible diplomatic engagement could cause significantly greater damage to global trade flows.
🇨🇳 China Responds, Calls for WTO Oversight
China has formally requested WTO intervention to review the impact of U.S. tariffs, arguing that retaliatory trade measures are counterproductive and could backfire on the U.S. economy itself.
The WTO is now considering convening a special session with member states to discuss long-term trade stability and collective strategies to mitigate growing risks.
✈️ Outlook for Goods and Services Trade Weakens
- Goods trade: China is expected to pivot toward alternative markets, with exports to non-North American regions projected to grow 4–9% in 2025.
- Services trade: Although not directly affected by tariffs, sectors like logistics, transport, and tourism are likely to feel the impact from the slowdown in goods movement and broader economic uncertainty.
✅ Bottom Line: Uncertainty Is the Enemy of Confidence
The WTO report concludes that “the ability of global businesses to navigate uncertainty will determine whether the macroeconomic momentum of 2024 can carry over into future trade recovery.” It urges global leaders to pursue constructive dialogue to prevent a full-scale recession and avoid long-term disruptions to global supply chains.