FILE- In this Tuesday, March 5, 2019, file photo the Cape Kortia container ship, left, heads into the Port of Tacoma in Commencement Bay in Tacoma, Wash. On Thursday, March 28, the Commerce Department issues the final estimate of how the U.S. economy performed in the October-December quarter. (AP Photo/Ted S. Warren, File)

GENEVA (AP) — The World Trade Organization has cut its forecast for trade growth this year by more than a percentage point, to 2.6%, due to an economic slowdown and amid a trade conflict between the United States and China.

The downgrade — from 3.7% forecast issued in September — reflects how quickly the prospects for global business are fading as, among other things, the U.S. and China struggle to agree on how to lift tariffs on hundreds of billions of dollars-worth of trade.

“Rising trade tensions are the major factor,” WTO Director-General Roberto Azevedo told The Associated Press on Tuesday after the release of the forecasts.

Beyond the trade war, the WTO has cited weaker economic growth in North America, Europe and Asia — largely as the effect of fiscal stimulus by the Trump administration wears off. It noted a “phase-out” of monetary stimulus in Europe and China’s efforts to shift its economy away from its traditional reliance on manufacturing and investment toward services and consumption.

In 2018, trade grew by just 3% — far below the WTO’s forecast for 3.9%, which had itself been downgraded last year. And next year, the Geneva-based trade body expects only a small uptick in trade growth by volume next year, to 3%.

“There is potential for a slight improvement in 2020 but that is very much dependent on an easing of the trade tensions,” he said.

The WTO oversees international trade rules and settles disputes between countries. The Trump administration has also been critical of the WTO, accusing it of being “unfair” with the United States.

The U.S. has slowly squeezed the WTO by blocking appointments to its dispute settlement group, the Appellate Body, which could in December fall below the minimum number of members required.

Azevedo pointed to the “fundamental importance of the rules-based trading system,” saying that its weakening would “be an historic mistake with repercussions for jobs, growth and stability around the world.”

US durable goods orders fall 1.6% in February

WASHINGTON (AP) — Orders to U.S. factories for big-ticket manufactured goods fell 1.6% in February, the biggest drop in four months, reflecting a plunge in the volatile commercial aircraft category. Demand in a key sector used to track business investment decisions also declined in February.

The Commerce Department said Tuesday that the February decline came after a small 0.1% rise January and was the weakest showing since a 4.3% fall in October. Orders in a category that serves as a proxy for business investment plans edged down 0.1% in February after a 0.9% advance in January.

The manufacturing sector has been strained for the past few months, reflecting a global economic slowdown and rising trade tensions which have hurt U.S. exports. But there have been more hopeful signs recently.

The Institute for Supply Management reported Monday that its manufacturing index rose to 55.3 in March, up from a reading of 54.2 in February, with employment gains in manufacturing a key driver of the increase. Analysts said factories are hiring to make sure they can meet demand in the coming months.

The report on new orders for durable goods, items expected to last at least three years, showed that much of the overall weakness came from a 31.1% plunge in orders for commercial aircraft, a drop that followed health gains in the past two months.

Orders for motor vehicles and parts dipped a small 0.1% following a 0.5% decline in January.

Demand for machinery fell 0.3% while orders for computers and electronic products fell 0.3%.

U.S. manufacturers have faced a number of challenges over the past year including trade wars begun by President Donald Trump. Trump is trying to pressure China and other nations to open their markets to more U.S. exports, but Trump’s imposition of tariffs on foreign goods has prompted other countries to levy retaliatory tariffs on U.S. products.

U.S. and Chinese negotiators are scheduled to meet in Washington this week to continue looking for a way to reach a trade deal that would remove the threat of higher tariffs.