The Director-General of the World Trade Organization, Ngozi Okonjo-Iweala, has raised alarm over the escalating trade tensions between the United States and China. She warned that the ongoing tariff war could slash merchandise trade between the two countries by up to 80%. She cautioned that this dramatic drop would not only strain bilateral relations but also deal a heavy blow to the global economy, especially as both countries collectively account for a significant share of world trade.
The U.S. recently escalated the trade conflict by increasing tariffs on Chinese imports to 125%, prompting China to retaliate with an 84% tariff on U.S. goods. These tit-for-tat measures have intensified fears of a prolonged economic standoff between the world’s two largest economies.
Okonjo-Iweala expressed concern over the potential fragmentation of the global economy into opposing blocs centered around the U.S. and China. She warned that such a division could lead to a long-term reduction in global real GDP by nearly 7%, underscoring the need for cooperative dialogue to mitigate these risks.
The WTO’s projections come amid a series of abrupt policy shifts. President Donald Trump recently announced a 90-day suspension of certain tariffs, a move that temporarily buoyed financial markets but left businesses grappling with uncertainty. Despite this pause, the heightened tariffs on Chinese goods remain in effect, exacerbating tensions.
China has responded defiantly, implementing its steep tariffs and expressing a willingness to engage in dialogue only based on mutual respect and equality. The Chinese government has signaled its intent to “follow through to the end” if the U.S. persists in the trade war, highlighting the entrenched positions on both sides.
The ongoing trade war has not only strained U.S.-China relations but also raised alarms about broader economic repercussions. Economists warn that the conflict could trigger a global recession, disrupt supply chains, and lead to significant job losses worldwide.
As the situation unfolds, the international community watches closely, hoping for a resolution that will stabilize markets and promote sustainable economic growth.
