The Director General of the World Trade Organization, WTO, Ngozi Okonjo-Iweala on Thursday warned that any tit-for-tat trade wars prompted by the United States, US, President Donald Trump’s tariff threats would have catastrophic consequences for global growth.
Okonjo-Iweala urged other states to refrain from retaliation.
This is coming after Trump threatened a spectre of trade wars against Russia over the battle in Ukraine.
Okonjo-Iweala spoke during the World Economic Forum annual meeting at the Swiss resort of Davos.
She said: “If we have tit-for-tat retaliation, whether it’s 25% tariff (or) 60% and we go to where we were in the 1930s we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay.”
Okonjo-Iweala said she was drawing a parallel with the period between the two World Wars when countries adopted trade restrictions in response to a US tariff act in 1930.
“We’ve seen this movie, as I said, elsewhere in the 1930s with the Smoot-Hawley Act. It made it worse,” she said.
“We’re very much saying to our members at the WTO, you have other avenues, even if a tariff is levied, please keep calm.”
Okonjo-Iweala said she was “encouraged” by Trump’s decision to hold off on immediately imposing tariffs on imports from countries like Canada and Mexico, opting instead to mandate investigations into trade practices.