WTO Chief Okonjo-Iweala Warns Against Trade Wars, Citing Catastrophic Global GDP Impact

On Thursday, Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, issued a stark warning about the consequences of escalating trade conflicts. She emphasized that tit-for-tat trade wars, such as those sparked by U.S. President Donald Trump's tariff threats, could have devastating effects on global GDP.

Speaking at the annual World Economic Forum in Davos, Switzerland, Okonjo-Iweala urged nations to refrain from retaliatory measures, cautioning that such actions could mirror the economic hardships of the 1930s.  

“If we have tit-for-tat retaliation, whether it’s 25% tariff (or) 60% and we go to where we were in the 1930s, we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay,” she stated.

Okonjo-Iweala referenced the interwar years when countries imposed restrictive trade policies in response to the U.S. Smoot-Hawley Tariff Act of 1930. “We’ve seen this movie, as I said, elsewhere in the 1930s with the Smoot-Hawley Act. It made it worse,” she remarked.  

The warning comes after President Trump’s threats of trade warfare against Russia over the ongoing conflict in Ukraine. Okonjo-Iweala expressed her concern about the potential global fallout from such actions and appealed to WTO member states to explore alternative avenues to resolve trade disputes.

“We’re very much saying to our members at the WTO, you have other avenues. Even if a tariff is levied, please keep calm,” she advised.