Massive sell-off hits US markets; WTO raises alarm over growing threat to global economy
New Delhi/Washington, April 4, 2025 — The US President Donald Trump’s aggressive new tariff policy is already sending shockwaves through the global economy. On Thursday, the US stock markets witnessed a steep plunge as investors reacted to the implementation of tariffs targeting nearly 60 countries. The World Trade Organization (WTO) has issued a stark warning, projecting that global merchandise trade could contract by nearly one percent this year.
The WTO’s concern centers on the broader implications of this policy shift, which it says could trigger retaliatory actions and deepen trade tensions worldwide.
WTO Director-General Ngozi Okonjo-Iweala stated, “These announcements will have a significant impact on the prospects of global trade and economic growth. Our initial estimates suggest a decline in global merchandise trade by about one percent in 2025.”
Markets React with a Wave of Selling
US financial markets responded immediately and decisively. Thursday saw a broad-based sell-off across Wall Street, with investor sentiment rattled by the uncertainty surrounding new trade barriers. Analysts noted that the markets are pricing in a prolonged period of economic friction between major economies.
“This is more than just market jitters. It’s a real-time reaction to the potential fragmentation of global supply chains,” one analyst said.
WTO Engages Member Nations Over Tariff Fallout
The WTO confirmed that its Secretariat is actively engaging with several member nations following the US tariff announcement. Many countries have approached the organization with concerns about the potential consequences for their economies.
“The situation is evolving rapidly,” said Okonjo-Iweala. “We are analyzing the decision thoroughly and are in constant communication with affected members.”
She added that while a majority of global trade—around 74 percent—still occurs under the WTO’s Most Favored Nation (MFN) terms, this share has already declined from 80 percent at the beginning of the year.
Risk of Trade War Escalation
There is rising fear among economists and policymakers that Trump’s tariffs could reignite a global trade war, particularly if targeted countries impose retaliatory duties. The WTO chief warned that further escalation could severely disrupt global economic stability.
“We are very concerned about the risk of retaliation and prolonged trade tensions,” she said. “WTO member countries must act responsibly and work together to preserve the hard-won gains of the global trading system.”
The organization is calling on all stakeholders to engage in constructive dialogue and prevent the current tensions from spiraling into a broader conflict that could damage international trade for years to come.
