Stephen Ukandu, Umuahia
The Director General of the World Trade Organization, WTO, Dr Ngozi Okonjo-Iweala, has expressed worry over the on-going trade war between the United States of America and China, warning that the standoff poses grave and imminent danger to global economy.
Recall that China had imposed 84% tariff increase on imports from the US following the initial 50% tariff by US President, Donald Trump, on imports from China.
But Trump, shortly before announcing a 90-day pause on his controversial tariff increase, has reciprocated the Chinese action by slamming 120% tariff on imports from China.
According to the WTO boss, merchandise trade between the world’s two economies could decrease by as much as 80% if the impasse were not quickly resolved.
Okonjo-Iweala in a post on her X handle on Wednesday warned that any further escalation of the tension would damage the global economy and have spiral effect on other countries.
The post read: “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%.
“This tit-for-tat approach between the world’s two largest economies — whose bilateral trade accounts for roughly 3% of global trade — carries wider implications that could severely damage the global economic outlook. Our assessments, informed by the latest developments, highlight the substantial risks associated with further escalation.
“The negative macroeconomic effects will not be confined to the United States and China but will extend to other economies, especially the least developed nations. 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 7%.
“Moreover, trade diversion remains an immediate and pressing threat, one that requires a coordinated global response. We urge all WTO members to address this challenge through cooperation and dialogue.
“It is critical for the global community to work together to preserve the openness of the international trading system. 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.”
Ikengaonline reports that WTO deals with the global rules of trade between nations.
The major function of the body is to ensure that trade flows as smoothly, predictably and freely as possible.
