In Geneva, where global trade rules are shaped and challenged, alarm bells are ringing. The World Trade Organization (WTO) has issued a sharp warning about the direction of American economic policy under President Donald Trump—and the ripple effects are global.
Ngozi Okonjo-Iweala, director-general of the WTO and former Nigerian finance minister, voiced serious concerns about the potential consequences of a widening rift between the United States and China. In a press conference held on April 16, 2025, she highlighted the risks of a prolonged trade decoupling between the two largest economies in the world, warning that such a move could significantly undermine already fragile global growth.
Trade War 2.0?
The WTO projects that a full breakdown in trade between the U.S. and China could lead to an 81% collapse in their bilateral trade volume. Though their direct trade accounts for only about 3% of global merchandise flows, the organization emphasized that the symbolic and systemic weight of such a split would be far more profound.
The consequences, according to WTO analysis, would extend well beyond these two economies. A complete decoupling would contribute to broader economic fragmentation—splitting the global economy into two isolated geopolitical blocs. In such a scenario, the organization projects a nearly 7% decline in global real GDP by 2040.
Global Slowdown on the Horizon
The WTO had previously forecasted steady growth for global trade through 2025 and 2026. Those projections have now been scaled back. While a temporary suspension of Trump’s sweeping punitive tariffs on countries other than China has slightly cushioned the downturn, the organization now expects global merchandise trade volume to contract by as much as 1.5% in 2025, depending on how U.S. tariff policy evolves.
In a more optimistic case—where tariffs on countries other than China remain suspended—global trade could decline by just 0.2% in 2025, with a modest rebound of 2.5% in 2026. But the WTO notes that risks remain high. A return to tit-for-tat tariffs or further policy uncertainty could deepen the contraction and disproportionately harm the world’s most export-dependent and vulnerable economies.
North America Feels the Strain
The sharpest regional impact is expected in North America. WTO forecasts show exports from the region falling by 12.6% this year, while imports are set to drop by 9.6%. By contrast, Asia is expected to maintain modest trade growth—1.6% for both exports and imports. Europe shows similar resilience, with 1% export growth and 1.9% on the import side.
Interestingly, the fallout from disrupted U.S.–China trade flows may actually boost China’s exports to other regions. Chinese merchandise exports are projected to grow between 4% and 9% in all regions outside North America.
A Glimmer in Services, But Warnings Persist
For the first time, the WTO also issued projections for services trade, expecting 4.0% growth in 2025—about a full percentage point below previous estimates. Meanwhile, global GDP growth is now forecasted at 2.2% in 2025, climbing slightly to 2.4% in 2026.
Despite these figures, the overarching message remains clear: the global economy is at a critical juncture. The WTO’s data suggests that continued uncertainty, escalating trade tensions, and fragmentation along geopolitical lines threaten not just near-term recovery, but the structural integrity of the global trading system itself.
Whether this moment marks a temporary disruption or the beginning of a more divided economic order remains to be seen. But for now, the warning from Geneva is unmistakable—what happens in Washington and Beijing won’t stay there. The fallout is global.