The Director-General of the World Trade Organization said new tariffs announced by the U.S. along with those introduced at the start of the year could lead to a contraction of around 1% in global merchandise trade volumes in 2025.

Trade flows would fall further if the U.S. were to respond to any retaliation with further tariff increases, said Ngozi Okonjo-Iweala, the WTO’s director general.

The WTO chief highlighted a concerning decline in the share of global trade conducted under the organization’s Most-Favored-Nation (MFN) terms, which has dropped from around 80% at the beginning of the year to approximately 74% following recent trade measures.