Trump tariffs set to trigger ‘steep’ decline in North America trade, WTO warns

As a result of President Donald Trump’s tariffs, global merchandise trade is expected to shrink in 2025 — with a “particularly steep” decline in store for North America, according to a new forecast.

The volume of goods traded worldwide will likely fall by 0.2% this year, concluded the latest World Trade Organization (WTO) report, released on April 16.

This marks a stark reversal from the Switzerland-based organization’s January projection, which found the global goods trade was on track to grow by 2.7% in 2025 — in line with the 2.9% growth recorded in 2024.

“The large number of new tariffs introduced since January prompted WTO economists to reassess the trade situation, resulting in a substantial downgrade to their forecast for merchandise trade,” a WTO news release said.

The latest forecast was calculated based on the current tariff situation, which includes a 10% baseline duty on all imports to the U.S. and a 145% duty on many Chinese imports.

North America versus the world

The anticipated trade impact of recent tariffs will negatively impact North America more than other regions, the report found.

North America — which includes the U.S., Canada and Mexico — is expected to experience a 12.6% decline in exports in addition to a 9.6% decline in imports in 2025.

This significant dip would shrink the worldwide goods trade by 1.7 percentage points, turning the total sum negative.

In contrast, other major regions — while expected to face declines — are still forecast to experience modest trade growth.

For example, Asia is expected to increase imports and exports by 1.6%, while Europe is anticipated to increase exports by 1% and imports by 1.9%.

“The collective contribution to world trade growth of other regions would also remain positive, in part due to their importance as producers of energy products, demand for which tends to be stable over the global business cycle,” the release said.

Declines in services trade

Although Trump’s tariffs only directly impact goods, they are also expected to have a negative effect on the global services trade, with North America, again, on track to experience some of the worst results.

In 2025, the total volume of services traded — which includes IT, finance and computer services — is forecast to grow by 4%, about 1 percentage point lower than was expected before Trump’s latest tariffs, the report states.

In North America, services exports are expected to grow by 1.6%, which is down from the baseline forecast of 2.4%. Meanwhile, services exports in Europe and Asia are anticipated to increase by 5% and 4.4%, respectively.

Exports from Africa and South America are predicted to decline.

Potential for even worse outcomes

The report cautioned that these predictions could understate global trade declines, given the higher tariffs could still be implemented.

If higher “reciprocal” tariffs — which Trump paused for 90 days on April 9 — go into effect, the global goods trade could shrink by 0.6%.

Economic uncertainty caused by the tariffs could be even more harmful, reducing the merchandise trade by an additional 0.8%, the report found.

“Our simulations show that trade policy uncertainty has a significant dampening effect on trade flows, reducing exports and weakening economic activity,” WTO Chief Economist Ralph Ossa said in the release. “Moreover, tariffs are a policy lever with wide-ranging, and often unintended consequences. In a world of growing trade tensions, a clear-eyed view of those trade-offs is more important than ever.”

This story was originally published April 16, 2025 at 11:12 AM with the headline "Trump tariffs set to trigger ‘steep’ decline in North America trade, WTO warns."