The World Trade Organization (WTO) released its updated merchandise trade outlook yesterday. The WTO raised its forecast for global merchandise trade as supply chains adapted to the Middle East conflict and spending on artificial intelligence (AI) surged. Still, several risks could weigh on the brighter outlook, including an escalation of geopolitical tensions and a slowdown in AI spending.

The WTO, now expects global merchandise trade volumes to grow by 3.9% in 2026, up from 1.9% in its March forecast. Trade growth is projected to reach 4.1% in 2027. Trade grew by 3.5% in the first half of 2026, beating expectations.
AI is driving the growth in trade this year. AI-related goods, such as semiconductors and servers, accounted for 47% of the increase in global goods trade by value in the first half of 2026. Trade in those products rose 67% from a year earlier.
The trade organization cautioned  that high fuel and fertilizer costs, tied to the disruption in the Strait of Hormuz, and any slowdown in AI investment, could weaken the outlook. It also cut its 2026 forecast for services trade growth to 3.3% from 4.8%. sector benefited from robust new orders and output. However, price pressures continued to worsen.
The WTO expects North American merchandise exports to grow by 5.7% in 2026, but imports to rise by just 1.4%, well behind Asia's 9.5%.
Canada is diversifying but still exposed.  Canada's exports to the US fell by 3.7% in 2025, while exports to other markets rose by 11.1%, lifting their share to a four-decade high of 32.8%. Even so, about two-thirds of exports still go to the US, where 50% tariffs now cover roughly $28 billion of Canadian goods.

Global trade is proving more resilient than expected, but the gains are largely concentrated in Asia and AI-related goods. For Canada, the picture is more mixed, where diversifying export markets helps, but heavy reliance on the US keeps tariffs a key risk to the outlook.

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