Trade Data

WTO Chief Warns: Tariff Trade War Would Be “Catastrophic”

World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has issued a stark warning about the potential consequences of a global trade war centered on tariffs. Speaking at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala emphasized the dire economic impact such a conflict could have on the world economy.

The WTO chief’s comments come in the wake of recent tariff threats by U.S. President Donald Trump, who has proposed implementing a 10% tariff on Chinese goods as early as February 1, 2025. This move has reignited concerns about a renewed trade conflict between the United States and China, with potential ripple effects across the global economy.

Okonjo-Iweala cautioned that if nations engage in tit-for-tat retaliation with tariffs ranging from 25% to 60%, the world could face a situation reminiscent of the 1930s. She warned that such a scenario could lead to double-digit losses in global GDP, describing it as “catastrophic” and emphasizing that “everyone will pay.”

The WTO chief drew parallels to the Smoot-Hawley Tariff Act of 1930, which exacerbated the Great Depression by sparking retaliatory measures from other countries. She urged WTO members to remain calm and explore alternative avenues for addressing trade disputes, rather than resorting to immediate tariff retaliation.

As global leaders and economic experts gather in Davos, the potential for a trade war looms large over discussions of economic growth and international cooperation. Okonjo-Iweala’s warning serves as a reminder of the interconnected nature of the global economy and the far-reaching consequences that protectionist policies can have on nations worldwide.

With the threat of escalating tariffs and trade tensions on the horizon, the international community faces a critical juncture in maintaining open and fair trade practices while addressing legitimate concerns about economic imbalances and national security.Sources:

  1. https://www.benzinga.com/markets/equities/25/01/43156850/wto-chief-says-everyone-will-pay-if-tit-for-tat-trade-war-breaks-out-amid-trumps-tariff-threat-leading-to-double-digit-global-gdp-losses
  2. https://www.newindianexpress.com/business/2025/Jan/23/wto-chief-warns-against-catastrophic-tit-for-tat-tariffs
  3. https://www.asiafinancial.com/trade-wars-would-be-catastrophic-for-world-economy-wto
  4. https://www.reuters.com/markets/trade-wars-would-be-catastrophic-global-growth-wto-chief-says-2025-01-23/
  5. https://finance.yahoo.com/video/wto-chief-says-tit-tat-152048824.html

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