Global merchandise trade could shrink by 1% this year as a result of US President Donald Trump’s latest tariff hikes and subsequent retaliatory measures, the World Trade Organization (WTO) said on Saturday.

“The WTO Secretariat is closely monitoring and analyzing the measures announced by the United States on April 2,” Director-General Ngozi Okonjo-Iweala stated.

In a sharply worded warning, she said early estimates suggest the tariffs, alongside those introduced earlier in 2025, mark a dramatic revision to the WTO’s previous forecast, which had predicted nearly 3% growth.

“I’m deeply concerned about this decline and the potential for escalation into a tariff war,” she said. “A cycle of retaliatory measures could lead to further trade contraction and economic uncertainty.”

Okonjo-Iweala urged WTO members to act with restraint. “Despite the new measures, 74% of global trade still operates under WTO Most-Favoured-Nation rules, down from 80% earlier this year. We must protect this foundation.”

She also highlighted the risk of major trade diversion and stressed the need for members to engage through the WTO platform to avoid a broader economic fallout.