There can be no doubt that 2025 has so far proven to be a challenging time for global trade, with businesses around the world dealing with a highly turbulent environment, largely driven by tariff uncertainties.
Many of US president Donald Trump's 'reciprocal tariffs' came into force earlier in August, following several months of ever-changing tariff rates and postponed deadlines. Several organizations have forecast this is set to be a major contributor to a slowdown in world trade as we head towards 2026.
But how has global trade responded in practice to these developments and what is the outlook for the months and years ahead?
Has 'frontloading' skewed trade in 2025?
Some initial estimates when US tariffs were announced in April suggested that the levies would have a large impact on overall world trade. The World Trade Organization (WTO), for example, forecast a 0.2 percent contraction in activity for the year as a result of the measures, compared with its pre-tariff outlook of a 2.7 percent increase.
However, activity has so far proven stronger than expected, with the body now estimating overall growth of 0.9 percent for the year as a whole. It suggested one key reason for this has been businesses 'frontloading' their trade efforts by looking to import and stockpile goods before tariffs come into force.
This was echoed by Pierre-Olivier Gourinchas, economic counsellor and director of research at the International Monetary Fund, who stated in a recent speech that a "strong surge" in shipments to the US in the early months of the year was fueled by concerns over tariffs. He noted this helped support activity in Europe and Asia.
With tariffs now in force, however, this surge appears to be over, with ports in the US reporting significant drop-offs in activity in recent months and forecasts for the coming months downbeat.
World trade 'more resilient' than expected - but is a slowdown coming?
A surge in activity to get in front of tariffs is therefore helpful in boosting figures for the year as a whole. But it is not the only reason why world trade has performed better than expected so far in 2025. For instance, Mr Gourinchas cited improved financial conditions such as a fall in inflation and a depreciation of the US dollar as factors helping insulate the effects of tariffs. However, this may be short-lived.
"This resilience is welcome, but it is also tenuous," he noted. "While the trade shock could turn out to be less severe than initially feared, it is still sizable and evidence is mounting that it is hurting the global economy."
This view was backed up by a recent report from the World Bank, which predicted that global trade growth will "slow markedly" this year. It stated that compared with its January predictions, annual trade growth for 2025 has been revised down by roughly 1.3 percentage points.
"At this pace, trade expansion would be less than half the annual average of about 4.9 percent in the two decades before the COVID-19 pandemic," the organization stated.
What are the key risks for 2025 and beyond?
The World Bank's report highlighted several key risks that could exacerbate the slowdown in global trade. One of the biggest issues will be if countries implement new trade restrictions, such as reverting to previously announced higher tariffs or expanding retaliatory measures.
On the business side, it warned that many firms may look to delay restructuring or investment decisions as policy directions remain unclear.
Organizations that did look to get ahead of tariffs by frontloading their shipments also face risks. Mr Gourinchas stated these firms could be exposed if anticipated demand for stockpiled goods turns out to be below expectations. The potential for new inflationary pressure in the US as businesses begin to factor in tariff costs to their prices could also contribute to weaker demand.
The World Bank and the WTO both warned the outlook for 2026 remains uncertain and high-risk, with the threat of tariffs likely to have a major impact on business confidence for the foreseeable future.