Global trade growth is expected to slow further in the third quarter due to a continued decline in exports and below-trend car production and sales as international tensions heat up, the World Trade Organization said.
The WTO's latest outlook indicator, a composite of seven indices on global trade trends, fell to a reading of 100.3 from the second-quarter reading of 101.8 published in May.
According to the WTO, the lower reading signals "an easing of trade growth in the coming months in line with medium-term trends."
"This loss of momentum reflects weakness in component indices including export orders and automobile production and sales, which may be responding to the ratcheting up of trade tensions," the WTO said.
In April, the WTO projected world merchandise trade volume to expand by 4.4% in 2018 and 4.0% in 2019, down from 4.7% in 2017.
With the expected softening of trade momentum, WTO Director General Roberto Azevêdo renewed warnings that a continued escalation of trade tensions would have major economic consequences, putting jobs and growth in all countries at risk.
"Global trade is under threat. Whether or not you call the current situation a trade war, certainly the first shots have been fired. This calls for our attention, and most importantly, our action," Azevêdo wrote in an opinion piece published by The Independent.
"The situation is extremely serious. Reciprocal trade restrictions cannot be the new normal," he added.
Separately, the European Central Bank also warned that downside risks to the global economy have "intensified" amid mounting trade tensions. The ECB projected that the average U.S. tariff rate would rise to levels not seen in the last 50 years if all the threatened measures were implemented.
"These developments constitute a serious risk to the outlook for global trade and activity in the short to medium term," the ECB said in its latest economic bulletin.
The latest warnings from the WTO and ECB come after the Trump administration's recent announcement that it would move forward with imposing 25% tariffs on $16 billion of imports from China, which fired back with its own tariff plan.
Washington is also weighing a separate 25% tariff on $200 billion of Chinese goods.