The World Trade Organization (WTO) has warned that uncertainty over tariffs and trade restrictions threatens to undermine recent growth in global goods trade.  

Merchandise trade grew through the first three quarters of 2024, after a year-long slump during the previous 12 months.  

The WTO’s latest trade barometer, which forecasts short-term trends based on a basket of key indicators, suggests the positive momentum continued during the last few months of 2024 and the beginning of this year.  

But the WTO warns “rising trade policy uncertainty” – a reference to tit-for-tat tariffs since the election of US President Donald Trump – means the index “should be interpreted with caution”. 

Since coming to power Trump has imposed sweeping tariffs on countries such as China, Canada and Mexico, and targeted tariffs on steel and aluminum from all its trading partners. Many affected countries have retaliated with their own measures to make imports from the US more expensive.   

The WTO says that while the barometer’s positive reading “would normally signify that merchandise trade was above trend with growth that was accelerating”, angst over tariffs “could have temporarily boosted trade as businesses and consumers frontload imports ahead of potential measures, possibly reducing demand later in the year”. 

It has been harder for traders to predict the impact of tariffs because of Trump’s mercurial policymaking: threatened tariffs have been revoked on the eve of implementation in exchange for concessions from foreign governments, only to be revived or even heightened without notice.  

The declining competitiveness of some European exports appears to be borne out in the data, with the WTO noting that the continent’s exports and imports “have been much weaker than anticipated”. 

Exports from Asia and imports into North America, meanwhile, “have exceeded expectations”. 

Looking ahead, the barometer’s inputs are all above trend, including for automative products, container shipping and air freight, which indicates higher growth. Export orders and trade in electronic components are on trend, which suggests softer growth.  

Export orders “should be watched closely for any sign of an emerging trade slowdown,” the WTO says. Since the beginning of 2023, the barometer’s forecast has been more positive than the actual trade figures but has correctly forecast the overall trend. 

A year-on-year fall in global goods trade during 2023 dragged down trade finance earnings at some large banks in Europe and Asia. But stronger underlying growth last year did not translate into a significant boost to trade business at large global lenders such as HSBC and Standard Chartered.  

Credit insurers, meanwhile, expect to see a rebound in coverage requests for short-term trade as corporates and financial institutions seek to shield themselves from a potential rise in non-payment risks.  

The next barometer will be released in April.