World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has warned that new U.S. tariffs, along with those introduced earlier this year, could reduce global merchandise trade volumes by around 1% in 2025.
In a letter to WTO member states on Thursday, Okonjo-Iweala said the Secretariat has received numerous requests to assess the economic impact of the tariffs and potential reactions from trading partners. “Many of you have been in touch about the U.S. announcement on tariffs, asking for the Secretariat to provide an economic analysis,” she wrote.
In a separate public statement, she said she is “deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade.”
The WTO currently oversees 74% of global trade, a drop from around 80% at the beginning of the year, as rising tariffs and trade barriers have diminished the organization’s reach.
European Commission President Ursula Von Der Leyen also criticized the latest U.S. move, calling the universal tariffs “a major blow to the world economy.”
Observers say the U.S. administration’s continued reliance on tariffs risks weakening the WTO’s authority and undermining its mandate to promote free trade. The Geneva-based body is facing growing pressure as trade tensions mount between major economies.
Okonjo-Iweala also warned of serious trade diversion effects and said the tariffs could create ripple effects across global supply chains.
