WTO Chief Warns of Severe Economic Impact from US-China Trade War
Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization (WTO), has highlighted the potential for the ongoing trade war between the United States and China to significantly impact the global economy. According to her statements, the conflict could reduce global gross domestic product (GDP) by as much as 7 per cent.
On Wednesday, tensions escalated as U.S. President Donald Trump raised tariffs on Chinese goods from 104 per cent to 125 per cent while pausing tariffs on numerous other countries. Okonjo-Iweala emphasized the gravity of the situation, noting that the U.S. and China together account for a mere 3 per cent of global trade. However, the implications of their trade war could reverberate far beyond their borders.
“The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade,” Okonjo-Iweala stated. She projected that trade between the two economic powerhouses could plummet by up to 80 per cent, raising concerns about the broader effects on the global economic landscape.
The WTO chief warned that the repercussions of this trade conflict are not confined to the U.S. and China; they extend to other economies, particularly the least developed nations. “Our assessments highlight the substantial risks associated with further escalation. The negative macroeconomic effects will not just be felt in the U.S. and China but will have widespread implications,” she said.
Okonjo-Iweala also expressed concern about the potential fragmentation of global trade along geopolitical lines, which could lead to a lasting division of the global economy into two blocs. This scenario could result in a long-term reduction in global real GDP by nearly 7 per cent, a development that could have dire consequences for international economic stability.
Trade diversion remains an immediate threat that requires urgent action. “We urge all WTO members to address this challenge through cooperation and dialogue,” she stressed. “It is critical for the global community to work together to preserve the openness of the international trading system.”
As discussions continue, Okonjo-Iweala reiterated the importance of the WTO as a vital platform for dialogue. “Resolving these issues within a cooperative framework is essential,” she stated, emphasizing that member countries have the agency to protect an open, rules-based trading system.
On April 4, she further noted that the recent tariffs imposed by the U.S. will have significant implications for global trade and economic growth prospects, underscoring the urgency of addressing these escalating tensions.
