WTO Director-General Ngozi Okonjo-Iweala has cautioned that prolonged U.S.–China trade tensions could slash global GDP by up to 7%, urging both nations to de-escalate and safeguard global economic stability
Ngozi Okonjo-Iweala Warns of 7% Global GDP Loss if U.S.–China Trade War Escalates
GENEVA / WASHINGTON — Director-General of the World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, has expressed deep concern over renewed trade hostilities between the United States and China, warning that an escalation could wipe out up to 7% of global GDP in the long run.
Speaking in an interview reported by Reuters over the weekend, Okonjo-Iweala urged both global powers to exercise restraint and return to dialogue, stressing that the implications of an extended trade war would be devastating for the entire world.
“We’re obviously worried about any escalation in the U.S.–China tensions,” she said. “We are really hoping that the two sides will come together and de-escalate because any U.S.–China decoupling has implications not just for the two biggest economies in the world, but also for the rest of the world.”
Her warning comes on the heels of new WTO trade forecasts, which sharply downgraded 2026 global merchandise trade growth to 0.5%, down from 1.8% earlier projected in August — citing delayed impacts from U.S. President Donald Trump’s tariff measures. The organisation, however, raised its 2025 forecast to 2.4%, reflecting a possible short-term rebound before tensions worsened.
The latest trade anxiety follows China’s new export controls on rare earth metals crucial to the technology industry, a move swiftly met with 100% U.S. tariffs on Chinese imports scheduled to take effect next month.
Okonjo-Iweala said while both sides had previously backed away from tariff escalation earlier this year, the renewed friction risked disrupting fragile global recovery.
“Any kind of decoupling that divides the world into two trading blocs would result in significant global GDP losses in the longer term — up to 7% — and double-digit welfare losses for developing countries,” she warned.
Okonjo-Iweala disclosed that she had delivered a similar warning to officials of the Group of 20 (G20) major economies, stressing that “there can be no global financial stability without global trade stability.”
“Pressures on the system have not eased and may intensify,” she told the G20. “The full effects of recent tariffs are still to be felt. Trade diversion is fueling protectionist sentiment elsewhere. And escalating tensions between the United States and China remain a serious risk.”
Despite the turbulence, she noted that most WTO member nations had resisted joining the tariff war, with 72% of global trade still operating under WTO rules — proof that the multilateral system remains resilient, even amid its most severe test in decades.
The WTO chief acknowledged that while multilateralism faces challenges, the crisis should be used as a catalyst for reform.
“There’s absolutely no doubt that there are global problems that cannot be solved by any one country alone,” she said. “You will need global cooperation to do it — that’s where multilateralism remains very relevant.”
She added that the WTO is committed to becoming “more flexible and efficient,” particularly in harnessing new opportunities in digital trade, services, and green trade.
Okonjo-Iweala also revealed that she held a productive meeting with Deputy U.S. Trade Representative Joseph Barloon, recently confirmed as the U.S. Ambassador to the WTO.
She said she was encouraged by Washington’s decision to remove the WTO from its list of international spending cuts and confirmed that efforts were ongoing to settle U.S. arrears owed to the trade body.
Dr. Ngozi Okonjo-Iweala’s renewed call for calm highlights the fragile state of global economic interdependence, as the world watches whether Washington and Beijing can avert another round of destabilizing tariff battles that could cost trillions in global output. Read More
