The World Trade Organization (WTO) has slashed its forecast for merchandise trade this year, as rising United States tariffs and increasing uncertainty are factors negatively impacting international commerce.
The mentioned organization, based in Geneva, expects the volume of world merchandise trade to decrease by 0.2% in the current year. This is almost three percentage points lower than it would have been if there had been no trade war. The revision of the WTO forecast indicates a significant change in expectations regarding the vision of prospects in early 2025. The organization also projects that the volume of world merchandise trade will grow by 2.5% next year.
The flow of goods and services around the world has gone through a difficult period amid the coronavirus pandemic and has only recently returned to normal. After a sharp increase in US import tariffs, the mentioned flow is once again beginning to sink into an unfavorable reality. President of the United States Donald Trump has promised to revive the American middle class with tariffs. These measures of Washington’s trade policy are primarily aimed at China and other countries with which the US maintains large trade deficits.
The WTO also warned that this year’s contraction will be even worse if the United States pushes ahead with higher levels of tariffs.
Moreover, the organization noted that while protectionist policies can boost domestic production, raise revenue, and narrow trade imbalances, in the medium and long term, higher import tariffs generally have an overall net negative impact on economic activity and trade.
As we have reported earlier, China’s GDP Growth Tops Expectations.
