WTO Warns U.S. Tariffs May Shrink Global Trade by 1%

The World Trade Organization (WTO) has issued a stark warning regarding the potential impact of the United States' tariff policies on global trade. According to the WTO, these policies could result in a 1% contraction in global merchandise trade volume for the year, a significant downward revision of nearly four percentage points from previous estimates. This alarming projection highlights the substantial influence that U.S. tariff measures could have on global trade dynamics and economic growth prospects.

The WTO's Director-General has expressed deep concern over the potential escalation of these policies into a full-blown trade war, which could lead to a series of retaliatory measures and further deterioration of global trade conditions. The WTO emphasizes that the majority of global trade is still conducted under the most-favored-nation treatment clause, and calls for unity among its members to safeguard these achievements and prevent further escalation of trade tensions.

On April 2, the U.S. President signed two executive orders related to so-called "reciprocal tariffs," imposing a 10% minimum tariff on trading partners and higher tariffs on certain partners. These measures are part of a broader strategy that has raised concerns about their potential impact on global trade and economic stability. The WTO is closely monitoring and analyzing these policies, as well as addressing questions from its members about the potential economic and trade system impacts.

The WTO's preliminary analysis suggests that these policies, combined with other measures implemented since the beginning of the year, could lead to a significant contraction in global merchandise trade volume. This contraction is expected to affect various sectors and regions, potentially leading to economic instability and reduced investment. The WTO's warning underscores the need for international cooperation and dialogue to address trade disputes and promote a more stable global economic environment.