WTO warns tariff war could cut US-China trade by up to 80%

Ms Okonjo-Iweala said in a statement that the escalating trade tensions between the US and China pose a significant risk of a sharp decline in bilateral trade. Preliminary forecasts from the WTO suggest that merchandise trade between the two economies could fall by as much as 80%.

The US and China account for 3% of world trade, Ms Iweala said, warning that the conflict could "seriously damage the global economic outlook".

Even as he imposed more tariffs on China, the US president paused higher tariffs on the rest of the world for 90 days after dozens of countries reached out for talks.

Ms Okonjo-Iweala warned that the world economy was at risk of splitting into two blocs, one centered around the US and the other around China. She expressed particular concern about the potential fragmentation of global trade along geopolitical lines.

The WTO chief also said that splitting the global economy into two blocs could lead to a long-term decline of nearly 7% in global real gross domestic product (GDP).

In that context, Ms. Okonjo-Iweala called on all WTO members to "address this challenge through cooperation and dialogue" to maintain the openness of the international trading system.

She affirmed that WTO members have a responsibility to protect the open, rules-based trading system and the WTO serves as an important platform for dialogue. It is necessary to address these issues in a cooperative framework.

Cargo port in Tianjin, China. Photo: THX/TTXVN

Hours before the WTO Director-General's speech, US President Donald Trump raised tariffs on Chinese goods to 104%, then adjusted it to 125% after China retaliated by raising tariffs on US imports to 84%.

After falling about 10% last week due to rising trade tensions, the US stock market jumped after Mr Trump announced his decision to suspend tariffs on other countries for 90 days.

Source: https://hanoimoi.vn/wto-warns-about-the-military-tax-war-that-can-cause-US-trade-to-fall-to-80-698460.html