The World Trade Caught in the US-China Conflict

WTO Reports Record Low Goods Trade Index in March
Likely to Decline Further as Reshoring Accelerates

[Asia Economy Reporter Naju-seok] Amid the COVID-19 pandemic, escalating tensions between the US and China are shaking global trade. The World Trade Organization (WTO) Goods Trade Index has fallen to its lowest level ever.

With the impact of COVID-19 and the highlighted US-China conflict, the outlook for global trade is worsening.

According to the WTO on the 20th (local time), the Goods Trade Index recorded 87.6 in March, marking the lowest level since the index was created. The Goods Trade Index is an indicator that predicts trade flows based on export orders, raw materials, and goods shipments, providing a forecast for trade flows over the next 2 to 3 months. The baseline is 100; values above indicate an upward trend, while values below indicate a downward trend. If reshoring, which attracts domestic companies operating overseas, accelerates, the decline in the trade index is expected to become more pronounced.

Earlier, the WTO predicted that global trade this year would decrease by approximately 13 to 32 percent depending on the duration of the COVID-19 pandemic. The WTO analyzed, "Currently, we are seeing the early stages of the COVID-19 pandemic, and there is no sign that trade has hit bottom."

On the same day, the United States pressured China over responsibility for COVID-19. US President Donald Trump emphasized that many lives were lost due to China’s inadequate response to COVID-19. US Secretary of State Mike Pompeo criticized the scale of support China promised to the World Health Organization (WHO), stating that $2 billion (approximately 2.46 trillion won) is too little compared to the negative impact on the world.