Trade wars triggered by Trump’s tariffs would be ‘catastrophic’, says WTO chief By Reuters
From Emma Farga
GENEVA/DAVOS, Switzerland (Reuters) – The head of the World Trade Organization said on Thursday that any trade wars sparked by U.S. President Donald Trump’s tariff threats would have disastrous consequences for global growth, urging countries to refrain from retaliating.
World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala, a former Nigerian finance minister, begins her second term as head of the global trade watchdog this year as Trump’s tariff threats raise the specter of trade wars.
“If we have a retaliatory tariff, whether it’s a tariff of 25% (or) 60% and we go to where we were in the 1930s, we will see double-digit losses in global GDP. It’s catastrophic. Everyone will pay,” she said. Okonjo-Iweala at the annual meeting of the World Economic Forum in the Swiss resort of Davos.
She drew a parallel to the period between the two world wars when countries adopted trade restrictions in response to the US Tariff Act of 1930.
“We saw this movie, like I said, somewhere else in the 1930s with the Smoot-Hawley Act. It just made it worse,” she said.
“We are telling our WTO members, you have other ways, even if a tariff is imposed, be calm,” she added, asking countries to study their options and use the WTO system to settle disputes.
That system has only been partially operational since late 2019, when Trump’s repeated vetoes of judicial appointments disabled his highest appeals court.
Okonjo-Iweala said she was “encouraged” by Trump’s decision to abandon the current imposition of tariffs on imports from countries such as Canada and Mexico, opting instead to order investigations into trade practices.
At the same WEF event, Brazil’s envoy urged Washington to refrain from adopting the tariffs altogether.
“By using tariffs politically, I think there is a negative spillover, which really hurts the rules-based international system,” Alexandre Parola said. – I think it’s a bad message.
