WTO Slashes 2026 Global Trade Forecast Amid Tariff Uncertainty

“The outlook for next year is bleaker … I am very concerned,” WTO Director-General Ngozi Okonjo-Iweala told reporters in Geneva, emphasizing the lingering effects of trade tensions on the global economy.

Resilience in the Global Trading System

Despite the gloomy forecast, Okonjo-Iweala highlighted the resilience of the world trading system. “The rules-based multilateral system is providing some stability amid trade turmoil,” she said, noting that structured global trade frameworks help cushion shocks even as tariffs disrupt flows.

2025 Trade Growth Upgraded, But Below 2024 Levels

For 2025, the WTO raised its forecast for global merchandise trade volume growth to 2.4%, up from a previous estimate of 0.9%. The increase is largely attributed to front-loading of U.S. imports ahead of planned tariff hikes and a surge in AI-related goods trade. However, this growth still lags behind the 2.8% expansion recorded in 2024.

Trump’s tariff measures, initiated since he took office in January, have unsettled markets worldwide. On August 7, higher tariffs were imposed on imports from dozens of countries, prompting nations like Switzerland, Brazil, and India to seek improved trade terms. The European Union reached a compromise, capping duties at 15% on most EU exports to the U.S.

Growth in 2025, Weak Outlook for 2026

The WTO now expects world merchandise trade volume to rise 2.4% in 2025, down from 2.8% in 2024, before slowing sharply to 0.5% in 2026. Global GDP growth is also forecast to ease slightly from 2.7% in 2025 to 2.6% in 2026.

“Tariff measures are weighing on trade, even though front-loading and the suspension of many duty hikes between April and August have delayed their effects into the latter part of this year and especially into next year,” Okonjo-Iweala explained.

First-Half 2025 Performance Strong

Merchandise trade volume in the first half of 2025 grew 4.9% year-on-year, while trade value rose 6%, compared with 2% growth in 2024. The WTO attributed this performance to exporters rushing to ship machinery, motor vehicles, lumber, and AI-related products to the U.S. before tariff increases took effect.

AI-linked goods, including semiconductors and telecommunications equipment, accounted for nearly half of overall trade growth, with year-on-year increases of 20%. Asia led the surge, reflecting robust export activity across the region.

Regional Outlook

Looking ahead, Asia and Africa are projected to see the fastest export volume growth in 2025. In contrast, Europe’s export growth is expected to slow, and North America may see declines. All regions face weaker import performance in 2026, reflecting the broader impact of trade tensions and tariff measures.