The World Trade Organisation has entered the brewing trade war over tariffs, warning that if it were allowed, it could be “catastrophic” for the global economy.
Director-General Ngozi Okonjo-Iweala, on Thursday, urged countries to keep calm over tariffs, warning that a tit-for-tat trade war would do no country any good.
Mrs Okonjo-Iweala issued the warning during a panel discussion on tariffs at the World Economic Forum in Davos, Switzerland, in a week that saw US President Donald Trump threaten tariffs against China, the European Union, Mexico, Canada and Russia.
The WTO director-general urged cooler heads to prevail, quipping: “Please let’s not hyperventilate. I know we are here to discuss tariffs. I’ve been saying to everybody: could we chill, also. I just sense a lot of hyperventilation.” she urged.
She recalled the Smoot-Hawley Tariff Act fallout in the United States during the Great Depression in 1930, which prompted retaliation and worsened the global economic crisis.
“We are very much saying to our members at the WTO: you have other avenues. Even if a tariff is levied, please keep calm, don’t wake up without the necessary groundwork, levy your own,” she said.
“If we have tit-for-tat retaliation, whether it’s 25 per cent tariffs, 60 per cent, and we go to where we were in the 1930s, we will see double-digit global GDP losses, double-digit. That’s catastrophic.”
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