The World Trade Organization (WTO) warns that new US tariffs could shrink global merchandise trade by 1% this year, as China plans a 34% retaliatory tariff on US imports and the French president urges European firms to halt planned investments in the United States.
The WTO head in a statement said the latest tariffs unveiled by the Donald Trump administration could lead to an overall contraction of around 1% in global merchandise trade volumes this year.
“The WTO Secretariat is closely monitoring and analysing the measures announced by the United States on April 2, 2025,” WTO Director General Ngozi Okonjo-Iweala said in the statement.
“Many members have reached out to us and we are actively engaging with them in response to their questions about the potential impact on their economies and the global trading system,” she added.
The recent announcements will have substantial implications for global trade and economic growth prospects, she notes.
“While the situation is rapidly evolving, our initial estimates suggest that these measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1% in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections,” said the WTO chief.
She said she was deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade.
Macron calls for suspension of investment in US
French President Emmanuel Macron called on Thursday for European companies to suspend planned investment in the United States after US President Donald Trump announced sweeping global tariffs on American imports.
“Investments to come or investments announced in recent weeks should be suspended until things are clarified with the United States,” Macron said during a meeting with French industry representatives.
The comments come weeks after French shipping firm CMA CGM announced plans to invest $20 billion in the US to build shipping logistics and terminals, a plan that was hailed by President Trump at the time, and mentioned again in his Wednesday speech unveiling the tariffs.
French electrical equipment supplier Schneider Electric (SCHN.PA), said late last month it would invest $700 million in the country to support US energy infrastructure to power AI growth.
China to impose 34pc retaliatory tariff on US goods
China’s finance ministry on Friday said it will impose a 34% tariff on all goods imported from the US starting on April 10, according to state news outlet Xinhua.
“China urges the United States to immediately cancel its unilateral tariff measures and resolve trade differences through consultation in an equal, respectful and mutually beneficial manner,” Xinhua cited the finance ministry as saying in a Google-translated report.
The ministry further criticized Washington’s decision to impose 34% of additional reciprocal levies on China – bringing total US tariffs against the country to 54% – as “inconsistent with international trade rules” and “seriously” undermining Chinese interests, as well as endangering “global economic development and the stability of the production and supply chain.”
CNBC has reached out to the White House for comment.
Beijing, which also entertained a tenuous trade relationship with Washington under Trump’s first term, had warned that it would take “resolute counter-measures” to safeguard its own interests after the White House disclosed its latest sweeping tariffs on Wednesday.
The mutual levies are set to impact a trade relationship worth $582.4 billion in goods in 2024, according to the Office of the US Trade Representative.
US stock futures fell to their session lows after China announced the retaliatory levies. Contracts tied to the Dow Jones Industrial Average were down 900 points, or 2.2%. S&P 500 and Nasdaq-100 futures dropped 2.3% and 2.6%. respectively.
European stocks also fell sharply on the news. The pan-regional Stoxx 600 index was 4.5% lower by 11:27 a.m. London time, extending earlier losses, with Europe’s banking sector falling over 9.5%.