The escalating trade war between the United States and China is poised to severely disrupt global trade, with the World Trade Organization (WTO) projecting a potential 80% reduction in merchandise trade between the two economic giants. This development, coupled with retaliatory tariffs, could spell disaster for the world economy, according to WTO Director-General Ngozi Okonjo-Iweala.
In a statement on Wednesday, Okonjo-Iweala described the economic standoff between the U.S. and China as a major threat to global trade. She warned that the tariff escalation, led by President Donald Trump, could cause irreversible harm, not only to the two nations but to the broader global economy.
As tensions reached a new high, President Trump raised tariffs on Chinese goods by 125% while China retaliated with a 84% increase on U.S. imports. Despite the fierce back-and-forth, Trump agreed to pause higher tariffs on other nations for 90 days, as negotiations continued with various countries.
Okonjo-Iweala emphasized the risk of a fractured global trade system, with the possibility of the world splitting into two distinct economic blocs—one aligned with the U.S. and the other with China. This bifurcation, she warned, could reduce global real GDP by nearly 7% in the long run.
The WTO chief urged all member countries to resolve this escalating crisis through dialogue and collaboration, stressing that continued unilateral tariff impositions could undermine global stability and prosperity.
The global economic outlook has already been shaken, with U.S. stock markets experiencing a 10% decline over the past week due to rising trade uncertainties. However, markets saw a brief rally following Trump’s announcement of a temporary halt to additional tariffs.
As the U.S.-China trade war continues to evolve, the ripple effects on global commerce and economic relations will be closely watched, with international cooperation increasingly seen as vital to averting further damage.
