The World Trade Organization (WTO) has issued a stark warning that former U.S. President Donald Trump’s sweeping tariffs could reverse global trade progress and stall economic growth in 2025. Once anticipating a 2.7% rise in goods trade, the WTO now projects a 0.2% decline due to Washington’s aggressive trade measures.

At the center of this downturn is the escalating “decoupling” of the U.S. and China. WTO Director General Ngozi Okonjo-Iweala expressed deep concern over the potential 81% collapse in trade between the two nations — rising to 91% without tech exemptions — calling it a dangerous fracture in the world’s two largest economies. The organization is considering an emergency meeting with member states to address the growing crisis.

The new U.S. tariff regime includes a blanket 10% on all imports, with targeted hikes totaling 145% on Chinese goods and specific sectors like autos and steel. Although paused for 90 days following financial market volatility, the WTO warns that reinstating these “reciprocal” tariffs could cause an even sharper 0.8% fall in global trade. In a worst-case scenario—marked by heightened policy uncertainty—the impact could widen to a 1.5% plunge and cut global GDP growth to just 1.7%.

The WTO’s report highlights that uncertainty alone is already chilling business investment and consumer confidence. “Uncertainty fosters prudence,” it states, noting that this alone can stall the momentum gained in 2024.

China has condemned the U.S. tariffs, urging the WTO to investigate and asserting that “reciprocal tariffs will backfire, harming the U.S. itself.” Meanwhile, Beijing is pivoting to new markets, with exports to regions outside North America expected to grow 4–9% in 2025.

While services trade remains untouched by tariffs, the WTO cautions that it won’t escape unscathed. Reduced goods trade dampens related services like logistics and transport, while rising uncertainty curtails travel and investment.

Trump’s actions challenge the core principles of the WTO, particularly the “most favoured nation” rule, which mandates equal trade treatment across member countries. As the watchdog of global trade rules, the WTO now finds itself at a critical crossroads.