WTO Forecasts On Trump's Tariffs Are Detteting

The World Trade Organization slashed its forecast for merchandise trade this year as soaring US tariffs and broader uncertainty hammer international commerce.

The Geneva-based WTO expects the volume of world merchandise trade to decline by 0.2% in 2025 — almost three percentage points lower than it would have been without the US-led trade war, marking a dramatic reversal from expectations at the start of the year.

 Trade is forecast to rebound by 2.5% in 2026.

The flow of goods and services around the world, which went through a tumultuous period during the Covid pandemic, had only recently returned to normal patterns before Trump was elected US president in November.

He ran on promises to revive the American middle class with tariffs aimed at China and other countries where the US maintained large trade deficits.

Two weeks ago, Trump announced so-called reciprocal import taxes ranging from 10% to 50%, though days later he suspended the highest rates for 90 days and kept 10% as the floor for all countries except China, whose exports to the US now face duties in excess of 100%.

The reprieve was aimed at giving bilateral negotiations time to play out, and a delegation from Japan is visiting the White House for talks today.

In the WTO’s forecasts, this year’s contraction will be even worse if the US pushes ahead with those higher levels of reciprocal tariffs.

“Together, reciprocal tariffs and spreading trade policy uncertainty would lead to a 1.5% decline in world merchandise trade in 2025,”

the WTO said in its report Wednesday.

While protectionist policies may boost domestic production, raise revenue and narrow trade imbalances — all three of which are Trump’s stated goals — the WTO said that “over the medium to long term, higher import tariffs generally have an overall net negative effect on economic activity and trade.”

In response to Trump’s measures, China has retaliated with levies of its own, as well as other measures targeting US companies and restricting access to exports of critical raw materials.

The WTO cautioned that a cycle of tit-for-tat responses could lead to a higher cost of living.

“Retaliatory measures in response to restrictive trade policies — such as tariffs on specific, difficult-to-substitute materials or intermediate goods — could have an outsized impact on inflation, or at least inflation expectations,”

the trade body said in its report.

#WTO #forecast #TrumpTariffs

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US kicked out of the World Trade Organization?

The global economy hangs on a cliff edge thanks to Trump’s draconian tariff threats. EU, desperate to save its dying economy, recently floated the idea of creating an alternative to the World Trade Organization, a group of like-minded countries that would maintain the rule of law in trade.

But according to Kristen Hopewell, a professor and Canada research chair in global policy at the University of British Columbia, there is a better option: keep the WTO, but kick out the United States.

Trump isn’t even pretending to follow the WTO rules anymore, the expert reasons. Ever since his reelecton, he launched a full-scale attack on the global trading system, terrorizing former allies with an endless barrage of threats and tariffs.

Hopewell said his behaviour will likely send the world back to the 1930s, when trade protectionism exacerbated the Great Depression.

Trump’s actions make a mockery of the World Trade Organization and its principles, says the professor, and warns that US rule violation will spread to other countries which will lead to a collapse of the existing trade system.

“If his brazen rule-breaking goes unpunished, why should other countries abide by the rules?”

asks Hopewell.

“Today, the U.S. accounts for only about one-tenth of world trade. The global trade regime can survive without it — but only if the rest of the world continues to follow the rules. It won’t, however, survive other countries imitating Trump’s rule-breaking, tariffs and other protectionist measures. This risk of contagion represents a grave threat to global economic security.”

The expert believes that the only way to preserve the rules-based system is to expel or suspend the U.S.

In this case the US would:

• Lose access to global markets at favorable WTO tariff rates
• Become subject to limitless tariffs
• Lose market access for its services exports
• Lose protections for its intellectual property (which is the foundation of its modern economic success and its dominance in high-tech sector)
• Lose WTO’s protections against trade discrimination, meaning that other countries could impose export restrictions and cut off US supply of vital goods

“The U.S. president has repeatedly threatened to withdraw from the WTO — it’s time to call his bluff,”

says Hopewell.

#WTO #WorldTradeOrganization #Trump #tariffs #trade #tradewar

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