WTO Director-General Ngozi Okonjo-Iweala warns that the escalating U.S.-China trade war could shrink global GDP by nearly 7%. She highlights the risk of severe trade disruption, economic fragmentation, and long-term damage to global markets, urging countries to pursue dialogue and cooperation to avert a deeper crisis.
Ngozi Okonjo-Iweala, Director-General of the World Trade Organization (WTO), has cautioned that escalating trade tensions between the United States and China could lead to a significant downturn in the global economy, potentially reducing worldwide GDP by as much as 7%.
Speaking on Wednesday, Okonjo-Iweala expressed concern over new tariff measures implemented by the US, where President Donald Trump increased tariffs on Chinese goods from 104% to 125%, while suspending tariffs for other nations.
She noted that although the US and China together account for roughly 3% of global trade, the ongoing conflict could result in an 80% drop in trade between the two nations, threatening global economic stability.
"The growing friction between the world’s two largest economies could severely disrupt international trade flows," she said. "Our early estimates suggest a major contraction in bilateral trade, with broader impacts that could harm global growth, particularly for developing economies."
Okonjo-Iweala emphasized that the consequences would not be limited to the US and China alone. Developing countries could face severe fallout, and global trade could become increasingly divided along political lines — a trend she warned might cause a long-term loss of nearly 7% in global GDP.
She called on WTO member states to address the brewing crisis with urgent dialogue and collaboration, stressing the importance of maintaining open, rules-based trade to safeguard the global economy.
