For two and a half years, economist Ralph Ossa served as Chief Economist of the World Trade Organization (WTO) in Geneva. Since early July, he has returned to the University of Zurich. In this interview, he reflects on his final months at the WTO, the US-led trade war, and its effects on global trade.

This interview by Thomas Gull was originally published in UZH News on 2.7.2025. Edited for layout purposes by the UBS Center.

Ralph Ossa, why did you return to the University of Zurich (UZH) after two and a half years as Chief Economist of the World Trade Organization (WTO)?

I’m very happy to be back. The position at the WTO was always term-limited – modeled after the new IMF approach. I would have been open to extending it a bit longer, but commuting between Geneva and Zurich wasn’t ideal for me or my family. Ultimately, it became clear that I wanted to be fully based in Zurich again.

How would you describe the last couple of months?

Very, very intense. I’ve never worked that much in my life. There was enormous uncertainty in trade policy due to US tariffs. The department I led was responsible for assessing their economic impact – globally and across individual member states. With 166 WTO members, which meant at least 166 perspectives. Reconciling those was a daily challenge.

Was it even possible to keep up, given how rapidly US tariffs changed at times?

We certainly tried. We have excellent teams which closely monitored developments, analyzed and modeled the effects. But volatility was extremely high at times, which made the work especially demanding.

There are concerns that the US-driven trade war could push the global economy into recession. What is your assessment?

Our spring forecast still projects global GDP growth of 2.2% for this year – 0.6 percentage points below a no-tariff scenario. For world trade in goods, we expect stagnation: a decline of 0.2%, which is 2.9 percentage points lower than it would have been without the tariffs.

Are we already seeing signs that Trump’s trade policy is backfiring on the US?

Yes, clearly. Tariffs of this magnitude create serious uncertainty, which can’t be good for the US economy. Our spring forecast puts North American growth – meaning the US, Canada and Mexico – at just 0.4%, down 1.6 percentage points from the no-tariff scenario. That said, the full effects of these measures will take time. The first quarter looked relatively solid due to preemptive stockpiling by firms ahead of scheduled tariff hikes.

Some say the WTO is being sidelined by the US, which is asserting raw power. Do you agree?

Yes and no. We’re indeed witnessing a shift from a rules-based to a power-based trading order. But we shouldn’t ignore how resilient the multilateral trade system still is. In January 2025, 83% of global goods trade was still conducted under WTO most-favored-nation tariffs. That figure has since dropped to 74% – a decline, but still a remarkably high share.

Still, nearly 10% less is significant.

The US trade war is a serious test for the rules-based system, no doubt. But some perspective is useful. Bilateral goods trade between the US and China accounts for about 3% of world trade. US imports make up 13% of global goods imports. That means 87% of demand comes from elsewhere. Finding a solution with the US is important, but it’s even more important to avoid harm to the remaining 87% of global trade.

Could you be more specific?

Bilateral agreements with the US must not further undermine international trade rules, or the damage will multiply. Despite all the recent troubles, there’s still a lot to preserve. International trade cooperation and the WTO are historic achievements, built over more than 75 years. Abandoning them because of temporary challenges would be very risky. My hope is that we’ll come through this, metaphorically speaking, with just a black eye.

Switzerland is currently negotiating an agreement with the US; the UK already has. Are such bilateral deals advisable?

I think Switzerland is managing its trade policy very well so far. It’s deeply engaged at the WTO but pragmatic enough to pursue necessary bilateral agreements. Swiss diplomacy quickly established direct lines to the US while maintaining dialogue with China.

The UK-US agreement is mostly a statement of intent laying out what both sides hope to negotiate in the future. But it also contains provisions that directly target China. That contradicts the WTO’s principle of non-discrimination, which requires equal treatment of all member states. Granting one type of deal to the US and another to China undermines the system. Switzerland must ensure that its negotiations with the US don’t create collateral damage for other trading partners.

Do you understand what the Trump administration hopes to achieve with its tariffs?

Some of the concerns raised by the Americans are legitimate – such as how a state-led economy like China’s fits into a rules-based trade system. The US also had relatively low tariffs by international standards. And there are macroeconomic imbalances, including the US trade deficit. But high unilateral tariffs are not a very effective way to address them.

Why not?

Trade deficits are much like budget deficits: spending more than you earn leads to debt. That’s not necessarily bad – if it’s for investment, for example. But when consumption consistently exceeds income, that’s a problem. Tariffs do little to change that. What the US really needs is to address its fiscal deficit.

It now seems to be about finding a new balance between open markets and a renewed tendency toward protectionism. On top of that, national security concerns – such as those related to technologies – are placing further limits on free trade. In this environment, is further progress on global trade liberalization still conceivable?

When it comes to national security, the US insists on defining its own interests – which is understandable. But if “security” becomes a catch-all for everything, it threatens to dismantle the entire rules-based system. We need clear limits here.

My second point is this: diversified trade relationships are the best hedge against geopolitical uncertainty. COVID showed us just how vital those connections are.

And we often overlook the bigger picture. Trade with countries like China, India and Vietnam has lifted hundreds of millions out of poverty. If you look at poverty data from the past 20 or 30 years, you could call it an economic miracle. We should keep that achievement in view – it was made possible by global trade.

Ralph Ossa is UBS Foundation Professor of Economics at the Department of Economics at the University of Zurich. From January 2023 to June 2025, he served as Chief Economist of the World Trade Organization. He is married and has two children.