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Info Service on WTO and Trade Issues (Jul25/22) Geneva, 16 Jul (D. Ravi Kanth) — The volume of world merchandise trade rose by 3.6% quarter-on-quarter and 5.3% year-on-year in the first quarter of 2025 due to a surge in imports in North America ahead of the reciprocal tariffs announced by the Trump administration on 2 April, according to the latest data released on 15 July by the World Trade Organization. Even though merchandise trade growth in volume terms in the first quarter was stronger than the WTO’s most recent forecast, WTO economists cast doubts over the pace of the expansion in the coming months, projecting that it is expected to slow down later in the year once fully stocked inventories and higher reciprocal tariffs weigh on import demand. It is somewhat surprising that the WTO’s Director-General, Ms Ngozi Okonjo-Iweala, did not make any observations on the projected global trade growth in anticipation of the US reciprocal tariffs that are expected to come into effect on 1 August. Usually, the data is presented with her own observations, but this time around she appears to have remained silent for some inexplicable reasons, said people familiar with the development. The WTO economists chose not to mention the word “reciprocal”, when they said “the new tariffs announced by the United States on 2 April at the start of the second quarter were widely anticipated, allowing importers to move purchases forward to avoid paying higher duties at a later date.” They argued that “trade volume growth in the first quarter was above projections issued in the WTO’s Global Trade Outlook and Statistics report on 16 April, both for the Secretariat’s baseline forecast of 2.7% for 2025, which assumed a continuation of policies in place at the start of the year, and the adjusted forecast of -0.2% assuming policies in place on 16 April.” Since then, “a variety of trade agreements and trade measures have nudged the adjusted forecast up and down slightly,” the WTO economists said, suggesting that “as of mid-June, merchandise trade growth for the year was still expected to be basically flat at 0.1%.” However, the sudden drop in the US dollar against other currencies did not seem to reduce the overall value of world merchandise trade. “Meanwhile, the US dollar value of world merchandise trade – as measured by non-seasonally-adjusted exports – was up 4% year-on-year in the first quarter of 2025, reflecting strong growth in volume terms and declining prices,” said the WTO economists. Further, they said that “the value of trade in the first quarter was down compared to the previous quarter due to regular seasonal variation, but seasonally-adjusted figures continued to rise.” DISPARITIES ACROSS REGIONS According to the WTO economists, “there were significant disparities across regions in merchandise trade volume growth in the first quarter, especially on the import side.” They said countries in North America recorded “the strongest quarter-on-quarter import growth of any region by far at 13.4%, followed by Africa at 5.1%, South and Central America and the Caribbean at 3.6%, the Middle East at 3.0%, Europe at 1.3%, and Asia at 1.1%.” “The Commonwealth of Independent States (CIS), including certain associate and former member states, was the only region to record a decline in the first quarter at -0.5%.” “On the export side,” according to the WTO economists, “the Middle East recorded the strongest quarter-on- quarter growth at 6.3%, followed by Asia at 5.6%, South America at 3.2%, Africa at 2.5%, Europe at 1.9% and North America at 1.8%. The CIS region also registered an export decline of -1.0% in the first quarter.” IN VALUE TERMS In US dollar value terms, the WTO economists said that “the strongest performance was in office and telecom equipment (+16% year-on-year), followed by chemicals (+12%) and clothing (+7%).” Against the backdrop of the Trump administration’s sectoral tariffs of 50% on steel and aluminium products, and 25% on automobiles and auto-parts, the WTO economists suggested that “among the product categories shown, only automotive products (-4%), fuels and mining products (-4%; of which: fuels -7%) and iron and steel (-3%) decreased in value terms.” “While fuel prices changed little compared with the same quarter in the previous year, prices for metals and minerals (excluding gold & silver) were 8% higher,” they noted. Further, “on the import side, strong year-on-year increases were observed in North America (+19%) and South America (+12%),” the WTO data suggested. “Regarding North America, imports of machinery, precious metals and pharmaceuticals showed marked increases, while vehicle imports dropped slightly,” the WTO economists said. “South America saw particularly strong imports of machinery, articles of iron and steel, and vehicles, while imports of fuel fell.” According to the WTO economists, “Asia’s first quarter merchandise imports increased the least amongst the regions (1%), apart from the 0.1% decline in the CIS region.” Significantly, “the imports of the United States were up 25% in the first quarter but only 1% in the first two months of the second quarter,” said the WTO economists, adding that for the year to date (January-May), US imports were up 15%. They said on the export side, shipments from China rose by “6% year-on-year in both Q1 and Q2, but other Asian economies saw export growth accelerate (e.g. India, down 4% year-on-year in Q1 but up 9% in April).” +
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