Tariff war could shrink US-China trade by as much as 80%: WTO chief

ISTANBUL

The World Trade Organization (WTO) estimated Wednesday that rising trade friction between the US and China could reduce trade between the two by as much as 80%.

"The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade," WTO Director-General Ngozi Okonjo-Iweala said in a statement.

"This tit-for-tat approach between the world’s two largest economies, which together account for roughly 3% of global trade, carries wider implications that could severely damage the global economic outlook," she added.

Okonjo-Iweala said the negative macroeconomic effects would not be confined to the US and China but extend to other economies, especially least-developed nations.

"A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7%," she said.

US President Donald Trump last week announced tariffs of 10-50% on more than 180 countries, rocking world markets.

China initially received a 34% tariff on April 2, but later was subjected to a 50% additional tariff by the US president as it did not withdraw a 34% retaliatory tariff on the US.

In his latest move, Trump announced Wednesday that the total tariff rate on China was increased to 125%, while granting more than 75 nations a 90-day reprieve from a Wednesday deadline in which they were expected to be hit with tariffs above his 10% baseline, in some cases many multiples higher than that figure.

ISTANBUL

The World Trade Organization (WTO) estimated Wednesday that rising trade friction between the US and China could reduce trade between the two by as much as 80%.

"The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade," WTO Director-General Ngozi Okonjo-Iweala said in a statement.

Okonjo-Iweala said the negative macroeconomic effects would not be confined to the US and China but extend to other economies, especially least-developed nations.

"A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7%," she said.

US President Donald Trump last week announced tariffs of 10-50% on more than 180 countries, rocking world markets.

China initially received a 34% tariff on April 2, but later was subjected to a 50% additional tariff by the US president as it did not withdraw a 34% retaliatory tariff on the US.