The World Trade Organization (WTO) has warned that the recent U.S. tariffs could lead to a 1% contraction in global merchandise trade volumes in 2025. WTO Director-General Ngozi Okonjo-Iweala expressed concern that these tariffs might trigger retaliatory actions, potentially escalating into a broader tariff war. She also highlighted the risk of significant trade diversion, where exporters redirect goods to alternative markets at lower prices, further destabilizing global trade.

The U.S. tariffs, announced by President Donald Trump, include a universal 10% tariff on imports, with higher rates on countries with significant trade deficits with the U.S., such as China, the European Union, and Japan. These measures have unsettled global financial markets, leading to a $2.5 trillion loss on Wall Street. The S&P 500 experienced a 4.9% drop, marking its worst trading day since 2020.

Global leaders have criticized the U.S. tariffs, with European Commission President Ursula von der Leyen describing them as a serious blow to the global economy. The European Union and the United Kingdom are considering retaliatory measures, including targeting symbolic American goods. Analysts warn that these tariffs could raise U.S. import costs significantly, potentially leading to higher consumer prices and increasing the risk of a recession. ​

The WTO's share in administering global trade has fallen from 80% to 74% this year due to these tariff actions. The organization has received inquiries from member states seeking an economic analysis of the U.S. tariffs and their repercussions. Observers warn that the U.S.'s continued emphasis on tariffs may undermine the WTO's role and its commitment to free trade.