Escalating US-China Trade Tensions Threaten Global Economy, Warns WTO Chief
posted 10th April 2025
Escalating US-China Trade Tensions Threaten Global Economy, Warns WTO Chief
9 April 2025
The Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, has issued a stark warning about the worsening trade tensions between the United States and China, cautioning that they could trigger a dramatic collapse in bilateral trade and destabilise the global economy.
In a statement released today, she highlighted that merchandise trade between the two economic powerhouses could plummet by as much as 80% if the current tit-for-tat measures persist.
The US and China, whose bilateral trade constitutes approximately 3% of global commerce, are locked in an escalating dispute that Okonjo-Iweala fears could have far-reaching consequences. “This approach carries wider implications that could severely damage the global economic outlook,” she said, pointing to the WTO’s latest projections. The organisation’s assessments underscore the mounting risks of further escalation, with ripple effects likely to hit hardest in the world’s least developed nations.
Perhaps most alarming is the prospect of the global economy splitting into two rival blocs, a scenario that could slash global real GDP by nearly 7% in the long term. “The potential fragmentation of global trade along geopolitical lines is of particular concern,” Okonjo-Iweala noted, urging immediate action to avert such an outcome.
Trade diversion—where flows of goods are rerouted due to tariffs and restrictions—poses another pressing threat. The Director-General called for a united global response, pressing WTO members to tackle the challenge through “cooperation and dialogue” rather than unilateral measures. “It is critical for the global community to work together to preserve the openness of the international trading system,” she stressed.
Okonjo-Iweala emphasised the WTO’s role as a crucial platform for resolving disputes and maintaining a rules-based trading order. “WTO members have agency to protect the open system,” she said, encouraging nations to leverage the organisation’s framework to defuse tensions and find solutions.
