Trump’s tariffs crash world trade forecasts

Many of shipping’s go-to bodies for trade forecasts are now slashing economic predictions for the year ahead in the wake of Donald Trump’s tariff war. 

Creating significant alarm, the World Trade Organization has warned global merchandise trade for 2025 could drop by as much as -1.5%, potentially becoming only the sixth time in the past 60 years where a decline in world merchandise trade has been registered joining famous economic shocks in modern history such as covid and the global financial crisis.

The volume of world merchandise trade is expected to decline by 0.2% in 2025 under current conditions, nearly three percentage points lower than what would have been expected under a low tariff baseline scenario, according to the WTO secretariat’s latest Global Trade Outlook and Statistics report released yesterday.  This is premised on the tariff situation as of April 14. Trade could shrink even further, to -1.5% in 2025, if the situation deteriorates come July 9 when Trump could slap more tariffs around the world.

WTO director-general Ngozi Okonjo-Iweala said: “I am deeply concerned by the uncertainty surrounding trade policy, including the US-China stand-off.”

She said the enduring uncertainty threatens to act as a “brake” on global growth.

Also voicing tariff concerns yesterday, the UN Trade and Development (UNCTAD) warned the world economy is on a recessionary trajectory.

Global growth is projected to slow to 2.3% in 2025, according to a new report from UNCTAD which cites trade policy shocks, financial volatility and a surge in uncertainty.

“Trade policy uncertainty is at a historical high,” the report noted, “and this is already translating into delayed investment decisions and reduced hiring.”

For tanker owners, both the International Energy Agency and OPEC have revised down their global oil demand growth projections for 2025 and 2026, citing headwinds from ongoing trade tensions—most notably the protectionist measures introduced by Trump.   

OPEC’s updated forecast now anticipates an increase of 1.3m barrels per day for both years, representing roughly 1% annual growth. The IEA revised its global oil demand forecast 300,000 barrels per day downwards to 730,000 barrels per day in 2025 and to 690,000 barrels per day in 2026. 

The US Energy Information Administration recently slashed its 2025 growth forecast by 30%, down to 900,000 barrels per day, while Goldman Sachs projects an even more conservative rise of 300,000 barrels per day between the end of last year and the end of 2025.   

For the container trades, a recent report from Linerlytica noted: “The US-China standoff continues to keep container market sentiment poor with US tariff concessions far from sufficient to restore Transpacific volumes with cargo bookings in the next 3 weeks reported to be down by 30-60% in China and by 10-20% in the rest of Asia.” 

In related news, California on Wednesday filed a lawsuit seeking to block Trump’s sweeping tariffs on foreign trading partners, accusing him of abusing his powers and inflicting financial harm on the state and nation.