US-China trade war risks dragging the world into recession, warns WTO head

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The head of the World Trade Organization has warned the risk of the US-China trade war to downstream the world, saying that if the global output completely dicke the two economic power houses, it will decrease by 7 percent.

Engozi Okonzo-Ila told the Financial Times that US President Donald Trump’s tariff and China’s revengeful tariffs were at risk of dividing the world into two trading blocks because the countries were “forced to choose one party or the other.”

“We are very worried that we are watching the potential decopling of the US/China business; we really want to avoid a case of geopolitical division,” said the Director General of WTO.

“This will reduce Global Real GDP 7 percent in the long run,” he added.

Okonzo-Iwala says that in the United States, it has deducted all imports from China with its “mutual” tariff, which has been fixed at 5 percent in addition to pre-existing responsibilities, and even the items like smartphones and electronic equipment have been exempted.

Trump’s tariff – Currently at a base rate of 10 percent in all imports – a forecast on Wednesday said the WTO said it would also damage North American trade around the world.

Canada, the United States and Mexico will be the only country where Trump’s tariffs are maintained by 10 percent of the export and import amount to both.

Trump has exempted many Mexican and Canadian products from its protective system, as there is a trade agreement with its neighbors in the United States, alienating the USMCA block from the growing global economy.

Overall USMCA exports will decrease by 12.6 percent this year and their imports are expected to decrease by 9.6 percent, WOO Dr. It compares to the previous estimates of more than 2 percent growth in both commercials before Trump announces the tariff.

The trade agency says Trump’s higher “mutual” tariffs were re -introduced after 90 -day breaks in July, but this year the global trade may decrease by 0.8 percent of the products. If other countries take revenge, uncertainty can shave more than 0.7 percent points, the WT also said.

The WTO said that if US tariffs are 10 percent, the overall global trade volume will decrease by 0.2 percent in 2021, the WT also said.

Former Nigerian finance minister Okonzo-Iwela says the poorest countries are already suffering.

“They are extremely weak. Five developed countries in the face of the highest mutual tariffs in five economies,” he said. “We should really think about recovering them in what we haven’t had before.”

However, he acknowledged that the “topic” in the United States was that countries were additional dependent on its market, a huge trade deficit. “They need to be diversified,” said Okonzo-Iwela.

He added, “95 percent of the semiconductor produced in one part of the world does not create global elasticity. 80 percent of the 80 percent of the world’s exported vaccines exported by the world do not create elasticity,” he added.

Okonzo-Iwela said he hoped that his Geneva-based company, who had 6 166 members, could help the broker solve the crisis.

The United States was a founding member of the WTO but the Trump administration has gradually removed international organizations after World War II.

One of Trump’s first steps after taking charge in January was the World Health Organization and the process of quit the Paris Climate Agreement and signing a executive order.

Okonzo-Iwela said WWO members are now more interested in reforming the trade agency so that it maintains a level of play.

“One of the good things coming from it is the members of the system built by WWO are seeing the value of the system’s forecast and stability.”