The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, has issued a strong warning against escalating trade disputes through retaliatory tariffs, emphasizing that such actions could have catastrophic consequences for the global economy.
Speaking during a panel discussion at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala highlighted the potential fallout of a tit-for-tat trade war, following threats by former US President Donald Trump to impose tariffs on China, the European Union, Mexico, and Canada.
Drawing parallels to the Smoot-Hawley Tariff Act of 1930, which triggered retaliatory actions and exacerbated the Great Depression, Okonjo-Iweala cautioned against repeating past mistakes.
She said, “Let’s not overreact. I understand the focus on tariffs, but I urge everyone to approach this calmly. At the WTO, we’re advising our members to explore alternative solutions. Even if tariffs are imposed, resist the urge to retaliate impulsively without proper groundwork.
If nations engage in tit-for-tat retaliation with tariffs ranging from 25% to 60%, we risk plunging back into a 1930s-style trade war. The result could be double-digit losses in global GDP—an outcome that would be catastrophic.”
Okonjo-Iweala’s remarks served as a call for restraint and collaboration among nations to avoid severe economic consequences.