Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, has cautioned global leaders against escalating tariff conflicts, urging nations to avoid a retaliatory trade war that could devastate the world economy.
At the World Economic Forum in Davos, Switzerland, Okonjo-Iweala called for restraint amid growing concerns over tariffs, particularly after U.S. President Donald Trump threatened to impose levies on China, the European Union, Mexico, and Canada.
She emphasized the importance of measured responses, referencing the economic fallout of the 1930 Smoot-Hawley Tariff Act, which worsened the Great Depression due to widespread retaliatory actions.
Okonjo-Iweala stressed that member nations of the WTO should prioritize alternative methods for dispute resolution rather than engaging in tit-for-tat tariff measures. She warned that such a trade war, with tariffs climbing to 25% to 60%, could result in significant global GDP losses, with potential consequences similar to those of the 1930s crisis.
“Double-digit global GDP losses would be catastrophic,” she said, urging countries to “keep calm” and avoid rash decisions.