Trump’s Tariffs Threaten Global Economy: WTO Warns of Sharp Slowdown

By Evans Momodu
Published 21:23

The World Trade Organisation warns that President Trump’s new tariffs could shrink global trade by 0.2% and cut U.S. economic output by 1.6 percentage points in 2025. Learn what this means for markets, jobs, and inflation.

President Donald Trump’s aggressive new wave of tariffs could deliver a serious blow to the U.S. economy and stall global economic growth, according to a stark new report by the World Trade Organisation (WTO) released Wednesday.

The WTO’s updated forecast warns that trade tensions between the U.S. and its global partners will cause global trade volumes to shrink by 0.2% this year, compared to an expected 2.7% growth had no new tariffs been imposed.

The trade conflict is expected to disproportionately impact North America, where economic output could drop 1.6 percentage points below projected levels without tariffs. This slowdown will likely lead to fewer jobs, slower wage growth, and reduced investment.

“Trade uncertainty slows business investment, reduces global trade flows, and ultimately weakens economic growth,” the WTO noted.

Trump's recent decision to impose a 125% "reciprocal tariff" on Chinese goods, along with a 20% blanket tariff on all Chinese exports to the U.S., has triggered sharp responses globally. While Trump announced a 90-day pause on some of the new tariffs, China is excluded, fueling further economic strain.

In response, the WTO anticipates that China may redirect its exports previously bound for the U.S. to other global markets, increasing competition and potentially destabilising regional economies. Exports of Chinese goods are expected to grow by 4% to 9% in regions outside North America this year.

The WTO now projects that the global economy will grow by 2.2% in 2025, a drop of 0.6 percentage points compared to its no-tariff scenario. If Trump proceeds with his full suite of tariffs after the 90-day pause, global trade volumes could contract by as much as 1.5%, the organisation warned.

Credit rating agency Fitch has echoed the WTO's concerns, slashing its 2025 global GDP forecast by 0.4 percentage points, and cutting its U.S. growth projection by 0.5 percentage points due to the heightened trade tensions.           
“We’ve sharply lowered our expectations for global growth,” Fitch said in a statement, citing the “severe escalation” of the global trade war.
Source: CNN 
Image: Reuters