LOC01:23
22:23 GMT
GENEVA, April 9 (KUNA) -- The World Trade Organization warned of the "significant risks" stemming from escalating trade tensions between the United States and China.
"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 on Wednesday.
"Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 percent," she noted.
She emphasized that this tit-for-tat approach between the two largest global economies which together represent approximately three percent of total global trade carries broader repercussions that could negatively impact global economic growth particularly in the least developed countries posing a threat to global economic stability and increasing the risk of a worldwide recession.
Okonjo-Iweala also voiced deep concern over the potential fragmentation of global trade along geopolitical lines warning that splitting the global economy into two competing blocs could result in a long-term decline in global real GDP of nearly seven percent.
"It is critical for the global community to work together to preserve the openness of the international trading system.
"WTO members have agency to protect the open rules-based trading system. The WTO serves as a vital platform for dialogue. Resolving these issues within a cooperative framework is essential," she stressed.
In a separate development, China's representative at today's WTO meeting expressed deep concern over the so-called "reciprocal tariffs" describing them as "neither a solution to trade imbalances nor a viable long-term policy."
He emphasized that these measures are likely to backfire harming the United States itself while also violating WTO rules and undermining the multilateral trading system.
"The U.S. attempt to address its trade deficit by imposing reciprocal tariffs on all trading partners is like treating the wrong illness with the wrong medicine" he stated.
He explained that the root of the U.S. trade deficit lies in structural imbalances including excessive consumption insufficient savings and the dominant role of the U.S. dollar in the global financial system.
He warned that imposing such tariffs would exacerbate inflation raise living costs disrupt supply chains and distort market dynamics pointing out that more than 90 percent of the cost of these tariffs is borne by American businesses manufacturers and consumers.
He added that this could undermine the foundations of global economic cooperation and risk triggering a U.S. recession with global ripple effects citing findings from the Peterson Institute for International Economics.
He called these actions "a severe breach of the multilateral trading order" warning that the move risks dismantling decades of global cooperation and liberalization that have driven global trade from 6 trillion dollars in 1995 to 30 trillion dollars in 2023.
US President Donald Trump announced the imposition of tariffs on imports from several countries, including China who responded by imposing similar tariffs.
In a further escalation President Trump raised the tariffs to as much as 104 percent prompting Beijing to retaliate once again with countermeasures that included tariffs of up to 84 percent. (end)
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