Global trade slows to record low as US, China tensions rattle economy
Global commerce is set to increase this year at the slowest rate on record, weighed down by a series of retaliatory tariffs and sluggish growth worldwide, the World Trade Organization said on Tuesday.
Trade volumes are likely to expand by a mere 1.2 percent — substantially lower than the 2.6 growth forecast in April. The WTO also lowered its forecast for 2020, predicting 2.7 percent growth, down from 3 percent previously. Last year, global trade widened by 3 percent.
“The darkening outlook for trade is discouraging but not unexpected,” WTO Director-General Roberto Azevêdo said in a statement.
The Belgium-based body warned that trade conflicts pose the biggest risk to the forecast, but that uncertainty surrounding Brexit, as Britain's breakup with the European Union is known, and overall financial volatility could squeeze growth and trigger a steeper downturn.
Depending on whether trade tensions continue to stress the economy, the WTO said it expects growth this year to be 0.5 percent to 1.6 percent, and from 1.7 percent to 3.7 percent in 2020.
“Risks to the forecast are heavily weighted to the downside and dominated by trade policy,” the report concluded. “Further rounds of tariffs and retaliation could produce a destructive cycle of recrimination.”
The year-long tit-for-tat tariff battle between the U.S. and China has culminated in hundreds of billions of dollars of tariffs on each other’s goods, roiling financial markets and forcing importers to reduce purchases.
Negotiations between the world’s two largest economies will resume in the second week of October; President Trump recently told reporters he believed the U.S. and China could strike a trade deal “sooner than you think.”
“We’re having some very good conversations,” Trump said.
Trump has also levied import duties on a slew of European goods, as well as steel and aluminum imports.