The Director-General of the World Trade Organization, Ngozi Okonjo-Iweala has said the US-China tariff war could cut trade in goods between the two economic giants by 80 percent, pulling down the rest of the world economy.
Okonjo-Iweala said this in a statement on Wednesday.
News360 Info reports that US President Donald Trump raised tariffs on China to 125 percent on Wednesday as the world’s two largest economies fought over retaliatory levies.
“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 said.
According to her, the United States and China together accounted for three per cent of world trade and warned that the conflict could severely damage the global economic outlook.
Trump, even as he slapped further tariffs on China, paused higher tariffs on the rest of the world for 90 days after dozens of countries reached out for negotiations.
Okonjo-Iweala warned that the world economy risked breaking into two blocs, one centred around the United States and the other 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, therefore, urged all WTO members to address the challenge through cooperation and dialogue.
A few hours earlier, the US president ramped up duties on Chinese goods to 104 percent, only to hike them further when China retaliated by raising tariffs on US imports to 84 percent.
Trump, in a social media post announcing the moves, said China had been singled out for special treatment because of the lack of respect that China has shown to the World’s Markets.
