World trade, measured by volume, recorded year-on-year growth of 1.8% in 2024, reported the Netherlands Bureau for Economic Policy Analysis (CPB).

The increase implied a recovery after a 1.2% decline in 2023.

World trade

According to the German Bundesbank (Bundesbank), the tightening of U.S. trade policy could seriously affect world trade and the global economy.

The following is the trend in world merchandise trade growth, measured in volume:

• 2018: 3.5.
• 2019: -0.3.
• 2020: -5.1.
• 2021: 10.5.
• 2022: 3.3.
• 2023: -1.2.
• 2024: 1.8.

Trump’s Tariffs

Newly elected U.S. President Donald Trump has stepped up tariff threats against Canada and Mexico, his main trading partners. In addition, import tariffs on Chinese goods have already increased 20% cumulatively by 2025, although not as much as promised before the election.

In February, Trump announced a 25% tariff on all imports of steel and steel products starting March 12, 2025, eliminating agreements with several countries, including Mexico, Canada, South Korea, Brazil and the European Union, among others.

He also ordered to increase the tariff on imports of aluminum and its derivatives to 25% as of March 12, 2025.

Trump also announced across-the-board tariff increases against several trading partners. 

These actions could lead to retaliation by the affected countries. If that happens, the United States has warned that it will impose further measures, which could trigger serious trade conflicts.

In this scenario, Bundesbank believes that uncertainty over trade policy has grown worldwide. In fact, this increased uncertainty alone could be holding back global economic activity.

Background

In the World Bank’s view, at the beginning of the 21st century, many emerging market and developing economies (EMDEs) experienced key growth. A broad political consensus on the benefits of global integration boosted cross-border trade and financial flows. At the same time, domestic structural reforms laid the foundation for this growth.

The creation of the World Trade Organization (WTO) in 1995 facilitated greater market access for these economies. In addition, the reduction of tariffs in trade agreements and technological advances in communication and transportation lowered the costs of international trade.