Introduction
The World Trade Organization (WTO) has forecasted that North America will be the region most affected by tariffs imposed by US President Donald Trump and subsequent retaliatory measures. The region, comprising the United States, Mexico, and Canada, is expected to see a 12.6% decline in exports and an 9.6% drop in imports by volume in 2025, with continued contractions in 2026. This is the only region projected to experience decreases in both exports and imports.
Original WTO Projections
Initially, the WTO anticipated that all regions would positively contribute to global merchandise trade volume growth in 2025 and 2026, although North America and Asia’s proportions would be smaller than in 2024. However, these projections were revised to reflect the trade policies implemented as of April 14, including the suspension of reciprocal tariffs by the US to demonstrate the likely impact on global trade and production.
Revised WTO Projections
Under the adjusted scenario, the WTO estimates moderate regional export growth for 2025. Central America, South America, and the Caribbean are expected to see a 0.9% increase in exports, while Africa’s exports will rise by 1.7%. Europe is projected to grow by 2.5%, Asia by 3.5%, and the Middle East will experience the highest growth at 5.1%.
The adjusted forecast shows Asia’s contribution to global trade growth in 2025 is significantly less than initially predicted, adding only 0.6 percentage points instead of 1.2. North America’s contribution now subtracts 1.7 percentage points from global trade growth in 2025, while Europe’s contribution slightly decreases to 0.5 percentage points from 0.6.
The collective contribution of other regions, including Africa, the Commonwealth of Independent States (CIS), Middle East, and South America, Central America, and the Caribbean, falls to 0.4 percentage points from 0.6, remaining positive and varying minimally across both scenarios and periods.
The WTO attributes this to the relative importance of these regions as producers of energy products, whose demand remains constant.
Caution and Future Updates
Given the unprecedented nature of recent trade policy changes, WTO economists advise interpreting these predictions with extra caution. They will continue monitoring incoming data and provide updates to the forecasts if necessary throughout the year.
This adjusted projection marks a shift from 2024, when the WTO underestimated global merchandise trade volume growth. The October 2024 report projected a 2.7% growth based on an assumed global GDP growth rate of 2.7% at market exchange rates. However, the actual trade growth was marginally higher at 2.9%, and global GDP growth was slightly revised upwards to 2.8%, leaving the trade-to-GDP growth relationship nearly unchanged.
By the end of 2024, both Asia’s exports and North America’s imports performed better than expected but still decreased.
Key Questions and Answers
- What are the main findings of the WTO’s revised projections? North America is expected to suffer the most from Trump’s tariffs, with a 12.6% decline in exports and an 9.6% drop in imports by volume in 2025, continuing into 2026. This region is the only one projected to see decreases in both exports and imports.
- How do the revised projections differ from the initial WTO forecasts? Initially, all regions were expected to positively contribute to global merchandise trade volume growth. However, the revised scenario reflects recent trade policy changes, showing moderate regional export growth for 2025 and a significantly smaller contribution from Asia to global trade growth.
- Why is the WTO cautious about interpreting these predictions? The unprecedented nature of recent trade policy changes necessitates extra caution when interpreting these predictions. WTO economists will continue monitoring data and provide updates if necessary.
- How did the 2024 global merchandise trade volume growth compare to the WTO’s initial projections? The actual global merchandise trade volume growth was marginally higher at 2.9% compared to the WTO’s initial projection of 2.7%. Global GDP growth was also slightly revised upwards to 2.8%, leaving the trade-to-GDP growth relationship nearly unchanged.
