Tuesday 19 February 2019 4:08 pm | Updated: Monday 03 June 2019 12:42 am

WTO blames trade war tariffs for weakest global trade in nine years

Global trade is about to hit its lowest level in nearly nine years, warned the World Trade Organization (WTO) today, as international tensions and political uncertainty weigh on countries .

The WTO's latest forecast warned that trade would fall below its baseline index value of 100 to 96.3 in the first quarter of 2019, the lowest reading since March 2010.

“This sustained loss of momentum highlights the urgency of reducing trade tensions, which together with continued political risks and financial volatility could foreshadow a broader economic downturn,” the WTO said in its World Trade Outlook Indicator today.

Almost all sectors the WTO measures were on track to suffer in the first months of 2019, with export orders, air freight, car production and shipments of electronic components and agricultural materials all far below the base level of 100, implying weak growth or even declines in those sectors.

Only cargo imports were on trend, predicted to hit 100.3, as companies frontloaded imports ahead of the prospect of even higher US tariffs on Chinese goods.

“Simultaneous declines in multiple trade-related indicators should put policy makers on guard for a sharper slowdown should current trade tensions remain unresolved,” the WTO warned.

However, a swift recovery is possible if greater certainty is found, it added.

De-escalation talks between the US and China are set to continue this week, with preliminary talks taking place today and higher-level discussions with Chinese vice premier Liu He happening later in the week.

“As Chinese negotiators head to Washington, it is clear that many sources of tension remain, notwithstanding concerns about Chinese telecoms giant Huawei, who the US have accused of using their equipment to spy and gather secrets about US intellectual property,” said Michael Hewson, chief market analyst for online trading platform CMC Markets.

The Dow Jones index fell around 34 points this afternoon to 25,849, while the S&P 500 fell around one point to 2,774.

However, Dean Popplewell, vice president of market analysis at Market Pulse, said Asian markets are hopeful that the two superpowers can reach an agreement before tariffs on Chinese goods rise on 1 March.

If no deal is reached before then, President Donald Trump has said he will increase tariffs from 10 per cent to 25 percent, affecting nearly $200bn (£154.8bn) of Chinese imports.