By Enyichukwu Enemanna
The US-China tariff war could reduce trade in goods between the two economic giants by 80 percent and drag down the rest of the world economy, the World Trade Organization (WTO) chief has warned.
“The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade. Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 percent,” WTO Director-General Ngozi Okonjo-Iweala said in a statement on Wednesday.
The United States and China together accounted for three percent of world trade, and the conflict could “severely damage the global economic outlook,” Okonjo-Iweala, a former Nigerian Finance Minister, stated.
Trump ramped up duties on Chinese goods to 104 percent, only to hike them further to 125 percent on Wednesday when China retaliated by raising tariffs on US imports to 84 percent.
After slamming further tariffs on China, Trump halted higher tariffs on the rest of the world for 90 days after dozens of countries reached out for negotiations.
The WTO chief warned that the world economy risked breaking into two blocs, one centred around the United States and the other around China.
“Of particular concern is the potential fragmentation of global trade along geopolitical lines. A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly seven percent,” she said.
She urged all WTO members “to address this challenge through cooperation and dialogue”.
“It is critical for the global community to work together to preserve the openness of the international trading system,” said Okonjo-Iweala.
“WTO members have agency to protect the open, rules-based trading system. The WTO serves as a vital platform for dialogue. Resolving these issues within a cooperative framework is essential.”
