Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, expressed deep concern on Thursday over the decline in global trade and the potential for an escalating tariff war, sparked by U.S. tariff measures.

Iweala said in a statement that the U.S. tariff measures will have "substantial implications for global trade and economic growth prospects."

The WTO estimates that the new measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1 percent in global merchandise trade volumes in 2025. This represents a drop of nearly four percentage points from previous projections.

"The WTO Secretariat is closely monitoring and analyzing the measures announced by the United States on April 2, 2025," Iweala said, adding that "Many members have reached out to us and we are actively engaging with them in response to their questions about the potential impact on their economies and the global trading system."

The director-general stressed that the vast majority of global trade still flows under the WTO's Most-Favored-Nation (MFN) terms, though the share has now shrunk to 74 percent from around 80 percent at the start of the year.

Warning of the potential for significant trade diversion effects resulting from the recent trade measures, Iweala called on WTO members to prevent escalating trade tensions, engage constructively and seek cooperative solutions.

On Wednesday, U.S. President Donald Trump announced a new set of levies, imposing a 10 percent baseline tariff on all imports starting on April 5 and slapping individualized reciprocal higher rates on those trading partners with which the United States "has the largest trade deficits," which will kick in on April 9. 

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