By Enyichukwu Enemanna
In response to President Donald Trump’s threat to increase tariffs on goods coming into the United States, the World Trade Organisation (WTO) has urged nations to remain calm over tariffs, warning that a tit-for-tat trade war would be “catastrophic” for the global economy.
WTO Chief, Ngozi Okonjo-Iweala, made the appeal on Thursday during a panel discussion on tariffs at the World Economic Forum in Davos, Switzerland.
Shortly before his inauguration on Monday as the 47th US President, Trump issued a tariff threat against China, the European Union, Mexico, and Canada.
The WTO Director-General, a former Nigerian Finance Minister, urged cooler heads to prevail, saying: “Please let’s not hyperventilate. I know we are here to discuss tariffs. I’ve been saying to everybody: could we chill, also. I just sense a lot of hyperventilation.”
She recalled the fallout from the Smoot-Hawley Tariff Act in the United States during the Great Depression in 1930, which prompted retaliation and worsened the global economic crisis at the time.
“We are very much saying to our members at the WTO: you have other avenues. Even if a tariff is levied, please keep calm, don’t wake up and, without the necessary groundwork, levy your own,” she said.
“If we have tit-for-tat retaliation, whether it’s 25 per cent tariffs, 60 per cent, and we go to where we were in the 1930s, we are going to see double-digit global GDP losses, double-digit. That’s catastrophic.”
Canada has also warned the US against raising tariffs, threatening to take adequate steps to impose tariff increases on US goods entering the country.
