WTO chief warns of catastrophic global economic losses due to trade wars

The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, has issued a stark warning about the potential consequences of escalating trade wars, emphasizing that retaliatory tariffs could result in devastating global economic losses.

Speaking at the World Economic Forum in Davos, Okonjo-Iweala said that any escalation of trade disputes, particularly those involving tit-for-tat tariff hikes, could push the global economy into double-digit GDP losses, Caliber.Az reports per foreign media.

"If we have tit-for-tat retaliation, whether it's 25 per cent tariff (or) 60 per cent and we go to where we were in the 1930s we're going to see double-digit global GDP losses. That's catastrophic. Everyone will pay," Okonjo-Iweala stated, referencing the negative economic effects of protectionism seen during the Great Depression.

The WTO chief also outlined another grim scenario in which the world splits into two major trading blocs. In such a scenario, Okonjo-Iweala projected a loss of 6.4 per cent in global GDP, equating to the combined economic output of Japan and South Korea. This fragmentation of global trade would significantly hamper long-term economic growth, she warned.

Okonjo-Iweala’s comments come amid ongoing discussions over the future of trade policy under US President Donald Trump. Trump, who has frequently threatened to impose steep tariffs on imports, notably from China and the European Union, had proposed a dramatic increase in import duties during his presidential campaign. His proposals included a 10 per cent tariff on all imported goods, 60 per cent tariffs on imports from China, and up to 100 per cent tariffs on cars produced outside the United States.

The WTO chief urged global leaders and policymakers to remain calm and wait for concrete actions from the US government, particularly in light of the president's ongoing trade policy shifts.

By Vafa Guliyeva