WTO forecasts trade headwinds as U.S. tariffs soar to century high

GENEVA (AN) — The average U.S. tariff rate has soared to 20.1%, the highest level since the early 1910s, according to new data from the World Trade Organization (WTO) and the International Monetary Fund.

The new figure, calculated by applying the latest tariffs to 2024 trade volumes, prompted a stark warning from WTO on Friday about a potential slowdown in global commerce.

It follows a day after a dramatic increase in U.S. tariffs took effect, reflecting the Trump administration’s continued push for "reciprocal" trade terms that present a sharp contrast to the 2.4% rate at the time of U.S. President Donald Trump's inauguration little more than six months ago.

The latest rate surpasses even the nearly 20% rate of the 1930s, a protectionist period widely blamed by economists for exacerbating the Great Depression.

The latest duties, implemented through a recent executive order, vary widely. While some key trading partners like the European Union, Japan, and South Korea face a 15% tariff, Switzerland was shocked by a 39% rate that stands as the highest among developed nations.

Other nations like India are subject to a 25% duty that is set to double in three weeks. Meanwhile, countries such as Syria and Laos have been hit with tariffs as high as 41%.

Global trade outlook worsens

WTO's latest forecast, released alongside the tariff data, paints a more cautious picture for global trade.

While the organization upgraded its 2025 merchandise trade growth projection to 0.9% — up from a previous forecast of a -0.2% contraction — this is a temporary boost driven by a surge in U.S. imports in the first quarter.

Companies, anticipating the new duties, rushed to frontload shipments, temporarily inflating trade volumes. WTO Director-General Ngozi Okonjo-Iweala, however, cautioned the full impact of the new tariffs is still unfolding.

"Frontloaded imports and improved macroeconomic conditions have provided a modest lift to the 2025 outlook," she said, but "the shadow of tariff uncertainty continues to weigh heavily on business confidence, investment and supply chains."

WTO's report predicts the positive effects of frontloading will fade, and the new tariffs will increasingly dampen trade in the second half of 2025 and into 2026.

The organization projects that North America will have a negative impact on global trade growth for the next two years. In a stark reversal, Europe's trade contribution in 2025 shifted from moderately positive to slightly negative. Asian economies are projected to remain the largest positive driver of world merchandise trade volume growth in 2025.

The new report also highlights the potential for a reconfiguration of global supply chains.

While a broader cycle of “tit-for-tat retaliation” has so far been avoided, WTO's secretariat plans to monitor the impact of the latest tariff measures, including on the share of global trade conducted under "most favored nation" principles.

The expiration of the current U.S.-China trade "truce" next week adds another layer of uncertainty to a global trading system already under immense stress.