As we enter the second half of 2025, global trade is slowing due to escalating adverse conditions. Trade restrictions that have lasted for a decade have worsened due to the sharp increase in tariffs and retaliatory measures taken by major economies over the past three months. Although some of these measures have since been rolled back and new negotiations have begun, institutions and companies still face significant challenges — including increased policy uncertainty, supply chain stress, and the ongoing threat of new barriers. In light of this situation, we explore how these adverse conditions are likely to reshape trade growth this year and next, identify the greatest risks ahead, and highlight positive aspects that may contribute to stabilizing trade flows.
Further Slowdown in Trade Growth Ahead
Our forecasts indicate a significant slowdown in global trade growth this year, largely due to the cumulative effects of rising tariffs and increasing uncertainty about trade policies. Policy uncertainty reached an unprecedented level following the announcement of U.S. tariffs in April but has somewhat eased since then as the U.S. administration rolled back some planned measures and entered trade negotiations with several countries (Figure 1-A). After a strong start to the year, driven by several factors including the acceleration of goods loading and shipping before the implementation of large tariff increases, annual global trade growth is expected to slow from 3.4% in 2024 to about 1.8% in 2025 (Figure 1-B). Compared to our January forecasts, global trade growth for 2025 has been revised down by about 1.3 percentage points, with nearly all country groups seeing downward adjustments. At this pace, trade expansion will be less than half the roughly 4.9% annual average growth seen in the two decades before the COVID-19 pandemic.
