TL;DR: The WTO upgraded its 2025 global trade growth outlook to 2.4% due to strong early-year demand and AI-related exports but cut its 2026 forecast sharply to 0.5%, citing the delayed effects of U.S. tariffs and a cooling global economy.
Key Points
What Happened
- The World Trade Organization (WTO) released its Global Trade Outlook and Statistics - October 2025 update on October 7, 2025.
- The WTO raised its 2025 global merchandise trade growth forecast to 2.4% (from 0.9% in August).
- The 2026 forecast was cut to 0.5% (from 1.8%) due to the full impact of tariffs and slowing global growth.
- 2024 trade growth was 2.8%.
Drivers of 2025 Growth
- Strong import “front-loading” into the U.S. ahead of August 2025 tariff hikes.
- AI-related goods (semiconductors, servers, telecom equipment) accounted for nearly half of first-half 2025 trade growth.
- Emerging markets showed robust demand and fiscal resilience.
- Global merchandise trade rose 4.9% year-on-year in the first half of 2025.
Reasons for 2026 Slowdown
- Full-year effect of U.S. tariffs covering about $500 billion in imports.
- Weaker global economy and muted restocking after 2025 inventory build-up.
- Rising trade restrictions and geopolitical uncertainty.
- Global GDP expected to slow from 2.7% in 2025 to 2.6% in 2026.
Services and Regional Outlook
- Global services trade growth forecast: 4.6% in 2025 and 4.4% in 2026, down from 6.8% in 2024.
- Asia leads trade growth (3.5%), while North America is expected to contract slightly in 2026.
Official Reactions
- WTO Director-General Ngozi Okonjo-Iweala said: “Global trade has shown remarkable strength this year, thanks to innovation in AI and solidarity among developing economies. But tariffs risk undoing these gains.”
- She added, “Trade resilience in 2025 is thanks in no small part to the stability provided by the rules-based multilateral trading system.”
- U.S. Trade Representative Katherine Tai defended the tariffs as “targeted protections for American workers.”
- China’s Commerce Ministry called the forecasts “a wake-up call for protectionism’s costs.”
Broader Economic Impact
- Tariffs may add 0.5-1% to U.S. inflation in 2026, increasing consumer prices.
- Supply chains are shifting toward Vietnam and Mexico, raising logistics costs by 10-15%.
- AI trade could add a 0.5% upside to 2026 growth if trends continue.