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.

China has lodged a formal complaint with the WTO against new U.S. tariffs, claiming they violate trade rules. This dispute has led to Chinese tariffs on U.S. goods and restrictions on exports of rare earths,