Dhaka, July 11 -- Global trade is facing its biggest test since World War II. Far-reaching tariffs introduced by the United States in early April - many of which were soon paused - have roiled trade and spilled over into financial markets. Investment and cross-border demand have already cooled as wary businesses and consumers sit on their hands.

At the World Trade Organization, we issued our annual trade forecast in mid-April, projecting a 0.2% contraction in global merchandise trade in 2025 - nearly three percentage points below what our economists would have expected without the new tariffs, retaliation, and uncertainty. The contraction could deepen to 1.5% if the paused tariffs are reinstated and trade tensions and uncertainty spread ...