Trump Tariffs Prompt WTO To Cut 2026 Trade Forecast To 1.8%; Check Details

While the frontloading effect is expected to lift trade activity this year, the WTO cautioned that elevated tariffs will curb momentum going forward

For India, the WTO’s improved 2025 outlook offers a glimmer of optimism

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The World Trade Organization (WTO) has projected a modest 0.9 per cent growth in global merchandise trade for 2025, attributing the uptick largely to the advance ordering of goods in the United States ahead of sweeping tariffs announced by US President Donald Trump. The latest forecast reflects a marginal improvement from April’s projection of a 0.2 per cent contraction, but still falls short of the pre-tariff estimate of 2.7 per cent.

While the frontloading effect is expected to lift trade activity this year, the WTO cautioned that elevated tariffs will curb momentum going forward. It revised its forecast for 2026 merchandise trade growth to 1.8 per cent, down from the earlier estimate of 2.5 per cent.

“Uncertainty remains one of the most disruptive forces in the global trading environment,” WTO Director-General Ngozi Okonjo-Iweala said, noting that tariff-related unpredictability is dampening business confidence, slowing investment, and disrupting supply chains.

India’s Trade Picture

For India, the WTO’s improved 2025 outlook offers a glimmer of optimism. In June, the country’s exports were flat at $35.14 billion amid persistent global headwinds. However, the trade deficit narrowed to a four-month low of $18.78 billion, suggesting some relief on the external sector front.

Asia Remains Key Driver

The WTO report pointed out that Asian economies will remain the largest positive contributors to global merchandise trade volume in 2025, although their share in driving growth is expected to taper in 2026 compared to earlier projections. By contrast, North America’s role is projected to drag on global trade growth in both 2025 and 2026.

The WTO’s latest assessment underscores a mixed picture for global trade — a temporary boost in the near term offset by medium-term challenges stemming from higher tariffs and policy uncertainty.