Last Updated on November 29, 2025 1:04 pm by INDIAN AWAAZ
R. Suryamurthy / NEW DELHI
Global merchandise trade is losing steam as tariff pressures build and early-year import front-loading ebbs, the World Trade Organization’s latest Goods Trade Barometer shows. Released on 28 November, the composite indicator dipped to 101.8 in September, signalling that while trade remains above trend, the pace of expansion is slowing and could weaken further into 2026. The WTO has already warned that world merchandise trade growth may fall to just 0.5% next year amid higher tariffs and persistent policy uncertainty.
The moderation is broad-based. Components such as electronics (102.0), air freight (102.7), container shipping (101.7) and automotive goods (103.0) continue to show expansion but at a softer clip. Only agricultural raw materials have slipped below trend, with an index reading of 98.0. Export orders—an early demand signal—have inched up to 102.3 after volatility last year, suggesting resilience but also highlighting that the peak from AI-related demand earlier in 2025 is now normalising.
Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), said the numbers underscore a structural shift: “The world is moving into a tariff-laden, policy-uncertain phase. The old assumption that trade would automatically rebound each quarter no longer holds. Countries like India that depend heavily on key markets must prepare for a tougher external environment.”
India’s October trade figures reflect this cooling global cycle—and reveal even sharper vulnerabilities. Merchandise exports fell 11.8% from a year earlier, with declines recorded in 15 of India’s 20 largest markets. The breadth of the contraction, trade analysts say, indicates weakening demand rather than a sector-specific problem.
Shipments to the United States, India’s largest market, declined 8.6%, while exports to the United Arab Emirates dropped 10.2%. Demand in Europe softened more visibly, with the United Kingdom down 27.2%, Italy 27.7% and the Netherlands 22.8%. Steeper falls in Singapore and Australia point to a sudden slackening in Asia-Pacific supply chains, particularly in intermediate and re-export-linked trade.
Only a handful of destinations posted gains, led by Spain and China, but much of this uptick was driven by oil, commodities and other energy-linked categories rather than higher-value manufacturing. Exporters in engineering goods, textiles, chemicals and electronics have reported rising input costs at home and softening orders abroad—an increasingly difficult combination as global price sensitivity increases.
The WTO’s findings line up closely with India’s export trajectory. The Barometer notes that import front-loading ahead of tariff actions boosted volumes in early 2025, especially for AI-driven electronics. But as that effect fades and tariff implementation begins across multiple markets—including the United States, which recently expanded levies on sectors ranging from steel to certain technology components—global trade is adjusting to a lower gear.
Srivastava said this creates a double bind for India. “When tariffs rise globally, Indian exporters face direct barriers, but they also face indirect shocks—buyers reorder supply chains, costs rise, deliveries slow. October’s numbers are an early sign of what 2026 could look like if global protectionism accelerates.”
The WTO’s own forecasts reflect that risk. Its October Global Trade Outlook projected merchandise trade growth of 2.4% in 2025 but only 0.5% in 2026, citing precisely the pressures now materialising—tariffs, industrial policy fragmentation, and persistent geopolitical uncertainty.
For Indian trade officials, the challenge is twofold: defending existing market share in slowing economies and accelerating diversification into regions that remain open to supply-chain investments. Exporters are urging faster implementation of logistics reforms, expedited free trade agreements and targeted support for manufacturing sectors facing disproportionate tariff exposure.
Economists caution that the global slowdown is not yet a collapse; WTO indices remain above trend and air freight and electronics—two bellwether categories—still indicate expansion. But they also warn that the window to insulate Indian exporters is narrowing. India has benefited from global demand for AI-linked components and energy products in 2025; as that demand stabilises, the structural effects of tariffs could prove more enduring.
For now, the signal from Geneva and New Delhi is consistent: global trade is cooling, pressure on exporters is rising, and India’s ability to navigate a more protectionist world will hinge less on cyclical demand and more on domestic reforms and market diversification in the months ahead.