World Trade Organisation (WTO) Director General Ngozi Okonjo‑Iweala has warned that escalating trade tensions between the United States and China could cause substantial global economic losses. In a recent interview she said that if the trade agitations continue, global economic output could fall by as much as seven percent over the longer term.
The WTO had already lowered its 2026 forecast for global merchandise‑trade volume growth to 0.5 percent, citing the delayed impact of U.S. President Donald Trump’s tariffs. At the same time, the organisation raised its forecast for global goods‑trade growth to 2.4 percent for 2025. These forecasts were issued before China introduced new export controls on rare‑earth metals, prompting the United States to impose 100‑percent duties on Chinese imports.
Okonjo‑Iweala noted that both the United States and China understand the importance of maintaining good relations because of the broader implications for the world economy and other countries. She warned that any decoupling that splits the world into two trading blocs would generate significant global GDP losses and double‑digit welfare losses for developing nations.
Addressing officials from the Group of 20 major economies, the WTO chief stressed that global financial stability cannot be achieved without stable global trade. She cautioned that pressures on the system have not eased and may intensify, with the full effects of recent tariffs still to be felt. Nevertheless, most WTO members have refrained from joining the tariff war, and 72 percent of global trade continues to follow WTO rules.
Okonjo‑Iweala called for long‑sought reforms to make the WTO more flexible, efficient, and capable of seizing new opportunities in digital trade, services, and green trade. She recently met with Deputy U.S. Trade Representative Joseph Barloon, who was confirmed as the U.S. ambassador to the WTO, and welcomed the U.S. decision to remove the WTO from its list of planned spending cuts to international organisations, as well as efforts to settle U.S. arrears to the trade body.
The ongoing U.S.–China trade tensions have significant implications for the global economy, and Okonjo‑Iweala’s warnings underscore the need for a cooling‑off between the two largest economies. As the WTO navigates these challenges, her call for reforms and cooperation highlights the importance of a rules‑based multilateral system in promoting global economic stability and growth.
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