The ongoing tariff dispute between the U.S. and China could potentially reduce trade between the two countries by up to 80%, according to WTO Chief Ngozi Okonjo-Iweala.
Speaking about the escalating trade tensions, Okonjo-Iweala warned that the trade war between the world’s two largest economies could severely impact global commerce, with merchandise trade between the U.S. and China likely to shrink by as much as 80%. She highlighted that these two countries account for 30% of global trade, and the conflict could harm the broader world economy.
In her statement, she cautioned that the tariff dispute could lead to a global economic slowdown and division. “A separation into two economic blocs—one led by the U.S. and the other by China—could lead to a long-term decline in global GDP by nearly seven percent,” Okonjo-Iweala stated.
She also urged countries to come together and find solutions through cooperation and dialogue, emphasizing that it was essential to maintain an open and rules-based international trading system. According to Okonjo-Iweala, the World Trade Organization (WTO) is a crucial platform for such discussions.
Meanwhile, U.S. President Donald Trump raised tariffs on Chinese goods to 125%, following retaliatory moves from China. Despite these actions, Trump paused tariffs on other countries for 90 days to allow for further negotiations.
The tensions have caused significant volatility in U.S. stock markets, which fell around 10% in a week, before recovering slightly after Trump’s announcement to pause the tariff hikes.
