The global economy may be heading for stormy waters as tensions rise between the United States and China. According to Dr. Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization (WTO), the ongoing tariff battle between the two economic giants could lead to an 80% decline in trade between them.
This alarming forecast came after former U.S. President Donald Trump slapped a new round of tariffs on Chinese goods, raising them to a staggering 125%. China responded quickly by increasing its own tariffs on U.S. products to 84%, intensifying fears of a prolonged trade war.
In a press statement on Wednesday, Okonjo-Iweala expressed deep concern. “The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade,” she said. “Our projections show merchandise trade could shrink by as much as 80%.”
But the impact may not stop there. The WTO chief warned that this economic fallout could trigger a dangerous global divide. “There is a serious risk that the world economy could split into two opposing blocs — one led by the U.S., the other by China,” she added. “If this happens, global real GDP could fall by nearly seven percent.”
Although Trump temporarily suspended tariffs on other countries for 90 days, allowing room for negotiation, he made it clear that China was being treated differently. In a social media post, he accused China of showing “a lack of respect” for global markets.
Interestingly, while U.S. markets had been dropping due to the tension, they saw a sudden boost after Trump’s 90-day pause announcement.
As fears of a deeper economic fracture loom, Okonjo-Iweala is urging all WTO member nations to step up. “Now is the time for dialogue and global cooperation, not division,” she emphasized.
What are your thoughts on this growing tension between the world’s two biggest economies? Could this really trigger a global recession? Let us know your take in the comments below!
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