The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, has sounded the alarm over rising hostilities between the United States and China, warning that their intensifying tariff battle could drastically shrink trade volumes and rattle the global economy.
Speaking on Wednesday following another sharp hike in U.S. tariffs on Chinese goods—now raised to 125 percent—Okonjo-Iweala said, “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.”
She noted that while the U.S. and China contribute significantly to global trade, the fallout from their conflict could “severely damage the global economic outlook.” Combined, the two countries account for roughly three percent of world trade, but the ripple effects of their standoff stretch far beyond their borders.
In a move that briefly calmed markets, President Donald Trump also announced a temporary 90-day suspension of new tariffs on other countries, following appeals for dialogue from multiple nations. However, Trump doubled down on his approach toward China, stating in a social media post that the country was being targeted due to “the lack of respect that China has shown to the World’s Markets.”
China had earlier retaliated by imposing 84 percent tariffs on U.S. imports, prompting a further escalation. Markets had tumbled nearly 10 percent in the week leading up to Trump’s announcement but saw a partial rebound after his global tariff freeze.
The WTO chief also raised concerns about a possible long-term fracture of global trade systems. “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.
Calling for unity, Okonjo-Iweala urged WTO members to resolve the dispute through diplomacy rather than isolation: “It is critical for the global community to work together to preserve the openness of the international trading system.”
She emphasized the WTO’s role in mediating such disputes, adding, “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.”
As tensions mount, the world watches closely—hoping for negotiation over escalation.
