World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala warned on Thursday that US President Donald Trump’s sweeping new tariffs could shrink global merchandise trade volumes by around 1% this year.
Her warning follows Trump’s announcement on Wednesday of a new wave of import duties—10% on all nations and steeper tariffs on dozens of specific countries, including major trading partners like China and the European Union. These come on top of tariffs already introduced since his return to office in January.
Okonjo-Iweala said the unexpected scale of the tariffs would have “substantial implications for global trade and economic growth prospects.”
“While the situation is still developing, our initial estimates suggest these new measures, combined with those introduced earlier in the year, could result in a contraction of approximately 1% in global trade volumes for 2025,” she said. This would mark a nearly four-point downward revision from the WTO’s earlier forecast.
She urged WTO member nations to respond with restraint to avoid a full-blown trade war.
“I am deeply concerned about the risk of escalation—a tit-for-tat tariff spiral that could further depress trade and damage the global economy,” Okonjo-Iweala said.
Despite the US actions, she noted that the majority of global trade—currently 74%—still takes place under the WTO’s Most-Favoured-Nation (MFN) rules, which prohibit discriminatory treatment among trading partners. That figure, however, is down from 80% at the start of the year.
“The WTO was built for moments like this,” she emphasized. “To provide a platform for dialogue, prevent conflict, and maintain a stable, rules-based trading system. WTO members must stand together to protect those principles.”