A full-blown trade war between the US and China could divide the global economy into rival blocs and slash worldwide growth by 7 per cent in the long term, the World Trade Organisation (WTO) said.
WTO Director-General Ngozi Okonjo-Iweala stated that bilateral trade between the world’s two largest economies could plummet by as much as 80pc, with far-reaching consequences.
This comes as President Donald Trump announced sweeping import taxes on all goods entering the US, marking a major shift in trade policy. While introducing a temporary 90-day pause for some countries, he raised tariffs on Chinese goods to 125 percent, citing a “lack of respect” after Beijing hit back with its own 84 percent levy on US imports.
Okonjo-Iweala said: “This tit-for-tat approach between the world’s two largest economies - whose bilateral trade accounts for roughly 3 percent of global trade - carries wider implications that could severely damage the global economic outlook.”
She added: “A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7 percent.”
Developing nations, particularly least-developed countries, would bear the brunt of the fallout.
“Trade diversion remains an immediate and pressing threat, one that requires a coordinated global response,” Okonjo-Iweala emphasized, urging WTO members to resolve disputes through dialogue.
The policy shift, first announced on April 2 and revised on April 10, signals a sharp escalation in trade tensions and a renewed push for Trump’s ‘America First’ agenda.
&uuid=(email))