World Trade Organisation chief Ngozi Okonjo-Iweala urged nations Thursday to keep calm over tariffs, warning that a tit-for-tat trade war would be “catastrophic” for the world economy.
Okonjo-Iweala issued her appeal during a panel discussion on tariffs at the World Economic Forum in Davos, Switzerland, in a week that saw US President Donald Trump threaten tariffs against China, the European Union, Mexico and Canada.
The WTO director general urged cooler heads to prevail, quipping: “Please let’s not hyperventilate. I know we are here to discuss tariffs. I’ve been saying to everybody: could we chill, also. I just sense a lot of hyperventilation.”
She recalled the fallout from the Smoot-Hawley Tariff Act in the United States during the Great Depression in 1930, which prompted retaliation and worsened the global economic crisis at the time.
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“We are very much saying to our members at the WTO: you have other avenues. Even if a tariff is levied, please keep calm, don’t wake up and without the necessary groundwork levy your own,” she said.
“If we have tit-for-tat retaliation, whether it’s 25 percent tariffs, 60 percent, and we go to where we were in the 1930s, we are going to see double-digit global GDP losses, double-digit. That’s catastrophic.”
Her statements come amid threats by Trump to impose tariffs on China, the European Union, Mexico and Canada.
President Trump recently threatened to impose a 25% tariff on imports from Canada and Mexico. In response, Canada has vowed to stand up for its citizens and is preparing potential retaliatory measures. The situation is tense, with both countries bracing for the economic impact of these potential tariff.
Trump also threatened Vladimir Putin with tariffs if the ongoing invasion of Ukraine fails to cease.
However, Chief Ngozi Okonjo-Iweala warned that a tit-for-tat trade war would be “catastrophic” for the world economy.
