A few weeks after the first wave of Washington’s tariff announcement, international trade data provides important indicators of serious risks for a trade transition to Europe, as a result of trade disruptions between the US and China, according to the World Trade Organization (WTO).
The WTO’s “Global Trade Outlook,” released Wednesday, found that by separating the Chinese and US economy, commodity trade between 2025 and 91% has led to a plunge in commodity trade of 81%.
As a result, the report foresees a 6% increase in China’s exports to Europe. But Europe is also hit by US tariffs and sometimes searching for other markets for export, says WTO.
“This is a two-way street, and there are European exports that divert to other economies,” said Ralph Ossa, chief economist at WTO, “Think about the high tariffs that are in force on cars, for example. This is how these tensions could potentially be propagated.”
The US imposes 25% tariffs on EU vehicles, steel and aluminum. The 10% US tariff also applies to other EU exports.
Tensions between China and the US are escalating with 145% tariffs facing 125% tariffs and Chinese exports to the US that have been hit with US goods to China.
More generally, the report forecasts show that China’s goods exports are projected to rise by 4% to 9% in all regions outside North America.
WTO Director Ngozi Okonjo-Iweala said that he needs to learn about the global trade disruption as he announced a 0.2% decline in global commodity trade volume in 2025.
“One of the clearest lessons of the Covid-19 crisis is the importance of diversifying sources. Today’s trade tensions remind us that demand must be diversified,” she said.
The report said that decoupling between the US and China economy contributes to widespread fragmentation of the global economy along the geopolitical lines of two isolated blocs.
It also affects global GDP. “Our estimates are that Global World GDP will be reduced by nearly 7% in the long run,” Okonjo-Iweala said.
