Tariff war could cut US-China goods trade by 80 per cent - WTO chief

GENEVA - The World Trade Organisation chief said Wednesday the US-China tariff war could reduce trade in goods between the two economic giants by 80 per cent, pulling down the rest of the world economy.

President Donald Trump raised tariffs on China to 125 per cent on Wednesday as the world's two largest economies fought over retaliatory levies.

In an aerial view, container ships sit docked at the Port of Oakland on April 09, 2025 in Oakland, California. (Photo by JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

"The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade. Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 per cent," WTO director general Ngozi Okonjo-Iweala said in a statement.

She said the United States and China together accounted for three per cent of world trade and warned that the conflict could "severely damage the global economic outlook".

Even as he slapped further tariffs on China, Trump paused higher tariffs on the rest of the world for 90 days after dozens of countries reached out for negotiations.

Okonjo-Iweala warned that the world economy risked breaking into two blocs, one centred around the United States and the other China.

"Of particular concern is the potential fragmentation of global trade along geopolitical lines. A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly seven per cent," she said.

She urged all WTO members "to address this challenge through cooperation and dialogue".

"It is critical for the global community to work together to preserve the openness of the international trading system," said Okonjo-Iweala.

"WTO members have agency to protect the open, rules-based trading system. The WTO serves as a vital platform for dialogue. Resolving these issues within a cooperative framework is essential."

Hours earlier, Trump ramped up duties on Chinese goods to 104 per cent, only to hike them further when China retaliated by raising tariffs on US imports to 84 per cent.

In a social media post announcing the moves, Trump said China had been singled out for special treatment because of "the lack of respect that China has shown to the World's Markets".

US stock markets had slumped around 10 per cent in the past week as trade tensions grew, but they surged after Trump announced his pause. - AFP