WTO Chief Warns Tariff War May Slash US-China Trade by 80%

WTO Chief Warns US-China Tariff War May Slash Trade by 80%, Shake Global Economy

The Director General of the World Trade Organization, Ngozi Okonjo-Iweala, has raised a red flag over the deepening tariff war between the United States and China. She warned that if the conflict continues, it could slash trade in goods between the two countries by as much as 80%—with massive ripple effects on the global economy.

The warning came after US President Donald Trump hiked tariffs on Chinese imports to a staggering 125% on Wednesday, April 9, 2025. This move marks another chapter in a spiraling trade confrontation between the world’s two largest economies.

In her official statement, Okonjo-Iweala described the escalating tension as “a significant risk of a sharp contraction in bilateral trade.” She added, “Our preliminary projections suggest that merchandise trade between these two economies could decrease by as much as 80 percent.”

The WTO boss didn’t sugarcoat the stakes. She cautioned that the dispute, if left unchecked, could “severely damage the global economic outlook.”

Let’s be clear—this isn’t just about two countries slugging it out. The United States and China together make up about 3% of global merchandise trade. That’s no small slice. A fallout of this scale would hurt supply chains, dent investor confidence, and likely send shockwaves through markets around the world.

As if to underline the drama, President Trump simultaneously paused new tariffs on other countries—for 90 days. This decision came after several governments rushed in with diplomatic appeals and calls for trade negotiations. But while the pause buys some time, it doesn’t apply to China, which Trump accused of showing “a lack of respect” to global markets.

China didn’t take things lying down either. Within hours, Beijing retaliated with an 84% tariff on American goods. In response, Trump ratcheted up duties even further, pushing them from 104% to 125% in a single day.

This tit-for-tat escalation triggered a whiplash reaction on Wall Street. The US stock markets had already slumped around 10% in the past week. But after Trump’s brief pause announcement, markets bounced back dramatically. All three major indexes shot upward as investors hoped that broader global trade disruptions might be avoided—at least temporarily.

Still, that optimism has limits. Okonjo-Iweala issued a stark warning about the danger of the global economy splitting into two opposing blocs—one led by the US, and the other by China. She said this division could shrink global real GDP by nearly 7% over the long term.

“Of particular concern is the potential fragmentation of global trade along geopolitical lines,” she said.

The WTO chief called on all member countries to resist the urge to retreat into economic nationalism. Instead, she pleaded for a return to dialogue and cooperation, warning that failure to do so could result in a weakened, divided world economy.

“It is critical for the global community to work together to preserve the openness of the international trading system,” she urged. “WTO members have agency to protect the open, rules-based trading system. The WTO serves as a vital platform for dialogue.”

In short, she’s telling world leaders: step up, or risk watching the house burn.

What’s more troubling is that this isn’t just about money and tariffs—it’s about power. The battle is a geopolitical contest disguised as a trade war. With both nations digging in, the chances of an easy resolution are shrinking.

Despite global pleas and market reactions, President Trump remains defiant. In a fiery social media post, he declared, “China has been singled out for special treatment because of the lack of respect that China has shown to the World’s Markets.”

The road ahead looks bumpy. If this trade war continues unchecked, it could push other countries to take sides, redraw global alliances, and fragment economic systems built over decades.

Whether you’re in New York, Nairobi, or New Delhi, this fight affects you. Prices may go up. Jobs tied to exports may vanish. Economies may slow down.

And so, all eyes are now on Washington, Beijing—and Geneva, where the WTO waits, ready to mediate if both sides are willing to talk.

But right now, it doesn’t look like either side wants to back down.