By Ayomide Otitoju
World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has warned that escalating trade tensions between the United States and China could slash merchandise trade between the two nations by up to 80 percent, dealing a major blow to the global economy.
Her warning came on Wednesday following President Donald Trump’s announcement of a steep increase in tariffs on Chinese goods, raising duties to 125 percent in the latest round of the trade dispute between the world’s two largest economies.
“Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 percent,” Okonjo-Iweala said in a statement. “The escalating trade tensions pose a significant risk of a sharp contraction in bilateral trade and could severely damage the global economic outlook.”
Together, the U.S. and China account for roughly three percent of global trade, according to the WTO. The growing rift, Okonjo-Iweala said, risks fracturing the global economy into rival blocs — one aligned with the United States and the other with China.
“Of particular concern is the potential fragmentation of global trade along geopolitical lines,” she said. “A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly seven percent.”
President Trump, while imposing the new tariffs, announced a 90-day pause on increased duties for other trading partners, following overtures from several countries seeking negotiations.
Earlier in the day, Trump had raised tariffs on Chinese goods to 104 percent before pushing them further to 125 percent after Beijing retaliated with its own levies of 84 percent on U.S. imports. In a post on social media, Trump justified the move by accusing China of showing “a lack of respect for the world’s markets.”
U.S. stock markets, which had seen a 10 percent decline over the past week amid growing tensions, rebounded after the announcement of the global tariff pause.
Okonjo-Iweala emphasized the importance of multilateral dialogue, urging WTO member states to remain committed to an open and rules-based trading system.
“The WTO remains a vital platform for dialogue. Resolving these issues within a cooperative framework is essential to safeguarding the stability of the global economy,” she said.
