WTO Forecasts Decline in Global Trade Volume for 2025 Amid Ongoing US Tariff Disputes

The World Trade Organization (WTO) has projected a decline in global merchandise trade volume by 0.2% in 2025, largely due to the ongoing trade tensions between the US and China. According to the WTO's latest report on Global Trade Outlook and Statistics, the high tariffs imposed by both countries on each other's goods are expected to severely affect world trade in the coming years.

The WTO further noted that the imposition of reciprocal tariffs and the broader spillover of policy uncertainty could cause an even sharper contraction of up to 1.5% in global goods trade. This decline is expected to particularly harm export-oriented least-developed countries (LDCs), whose economies heavily rely on international trade. The report highlighted that under current conditions, the volume of world merchandise trade will fall by 0.2% in 2025, which is nearly three percentage points lower than the anticipated trade volume under a scenario of low tariffs.

This gloomy forecast is a concern for global trade in general, and particularly for countries like India, which is striving to boost its exports. India, with its ambitious goal of reaching $2 trillion in goods and services exports by 2030, now faces significant challenges. The current global trade outlook does not align with India's export aspirations, and the slowdown in global trade could make it difficult for the country to achieve this target.

Despite these global uncertainties, India has shown resilience in its export performance. In March 2025, India's exports recorded a marginal 0.7% increase, reaching $41.97 billion, marking the first positive growth after a four-month period of decline. This increase, though modest, indicates India's capacity to bounce back in difficult global conditions. Furthermore, India’s overall exports of goods and services crossed an all-time high of $820 billion in the last fiscal year, reflecting the country’s significant role in the global trade ecosystem despite the economic challenges worldwide.

However, the WTO's projections suggest that the trade landscape in 2025 will be far from ideal. The imposition of high tariffs by major economies, particularly the US and China, has created a volatile and uncertain global trade environment. This situation is compounded by other factors such as ongoing geopolitical tensions, supply chain disruptions, and shifting economic policies that could further dampen trade activity.

For India, the situation remains complex. While the country’s export sector has shown remarkable growth over the years, the WTO’s forecast suggests that the ongoing tariff wars and broader global trade disruptions could pose serious challenges to India’s goal of reaching $2 trillion in exports by 2030. The Indian government may need to take additional measures, such as diversifying export markets, focusing on high-value products, and negotiating trade agreements to counter the negative impacts of these global trade disruptions.

The WTO’s report serves as a reminder of the interconnectedness of global trade and the far-reaching effects of national policies. As global trade volumes are expected to shrink in the coming years, countries, including India, will need to navigate these challenges carefully to sustain and grow their export sectors in an increasingly uncertain global trade environment.