Global trade patterns are slated to shift amid growing tension, WEF reports

Around 89% of leading economists from the public and private sectors expect a “tit-for-tat” trade war between the US and China, while 68% expect restrictions to go beyond just the two countries, according to the World Economic Forum (WEF) Chief Economists Outlook Report (pdf). On a more positive note, around 94% of those surveyed believe it is highly unlikely that the harshest tariffs promised by US President Donald Trump on the campaign trail will be enacted.

Background: The world has been gearing up for Trump’s potential trade war, which could see a 10 to 20% tariff on imports from all foreign countries and an additional 60-100% tariff on imports specifically from China.

What the economists agree on: Most surveyed economists believe that the increasing trade restrictions would increase consumer prices and that the world would continue to see global trade shifting to services at the expense of goods. Around 76% also believe that trade will become less global and more regional.

But the outlook for global trade growth remains murky: Some 48% of the surveyed economists stressed they expect global trade volumes to rise in 2025, while 33% were uncertain and 18% expected a decline. The IMF sided with the optimist respondents, predicting global trade volumes will increase by 3.4% y-o-y in 2025.

Protectionism expected to leave a mark: Virtually all respondents said they believe global protectionism will cause durable changes to trade patterns, while 93% said they expect supply-chain restructuring to do the same. Some 83% said conflict and sanctions will have a significant impact, while 77% said the same about national security concerns.

Looking forward: Trade patterns are increasingly shifting towards geopolitically aligned nations, which research indicates may significantly slow down growth. The most recent data for 3Q 2024 shows that geopolitical friendshoring continues, though at a somewhat reduced pace, while regional trade concentration has started to decline more noticeably.