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US President Donald Trump’s worldwide tariff salvo could lead to an overall contraction of around 1 percent in global merchandise trade volumes this year, the WTO chief warned Thursday.
After Trump on Wednesday unveiled a blitz of harsher-than-expected levies aimed at countries around the globe, Ngozi Okonjo-Iweala warned the measures would “have substantial implications for global trade and economic growth prospects”.
Trump slapped 10 percent import duties on all nations and far higher levies on imports from dozens of specific countries — including top trade partners China and the European Union — adding to tariffs already imposed since his return to power in January.
“While the situation is rapidly evolving, our initial estimates suggest that these measures, coupled with those introduced since the beginning of the year, could lead to an overall contraction of around 1 percent in global merchandise trade volumes this year,” the World Trade Organization director-general said in a statement.
This, she said, would represent a drop of nearly four percentage points from the WTO’s previous projection.
Okonjo-Iweala urged WTO members to manage the tensions resulting the US measures responsibly.
“I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade.”
Okonjo-Iweala stressed that despite the US measures “the vast majority of global trade” still flows under WTO’s so-called Most-favoured-nation (MFN) status, which bars countries from discriminating between their trading partners.
“Our estimates now indicate that this share currently stands at 74 percent, down from around 80 percent at the beginning of the year,” she said.
“WTO members must stand together to safeguard these gains.”
Okonjo-Iweala highlighted the fact that “the WTO was established to serve precisely in moments like this — as a platform for dialogue, to prevent trade conflicts from escalating, and to support an open and predictable trading environment”.
AFP
