WTO Chief Warns of ‘Catastrophic’ Impact of Tit-for-Tat Tariffs on Global Trade

The World Trade Organization (WTO) chief has cautioned against escalating tit-for-tat tariffs, warning of severe consequences for the global economy and trade relations.

Ngozi Okonjo-Iweala, the head of the World Trade Organization, called on nations Thursday to maintain composure regarding tariffs. She cautioned that a retaliatory trade war could have “catastrophic” effects on the global economy.

During a panel discussion on tariffs at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala made her appeal. This occurred in a week when US President Donald Trump threatened to impose tariffs on China, the European Union, Mexico, and Canada.

The WTO director-general called for calm, humorously advising: “Let’s try not to overreact. We’re here to talk about tariffs, but I’ve been reminding everyone: can we also stay relaxed? I sense a lot of stress in the room.”

She remembered the consequences of the Smoot-Hawley Tariff Act in 1930 United States during the Great Depression, which led to retaliatory measures and exacerbated the global economic crisis.

“We are strongly advising our WTO members that even if a tariff is imposed, there are alternative options available. Please remain calm and refrain from imposing your own tariffs without proper preparation,” she stated.

“If we engage in tit-for-tat retaliation with tariffs of 25 percent or even 60 percent, reverting to conditions similar to the 1930s, global GDP could suffer double-digit losses. This would be catastrophic.”