World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala has expressed deep concern over renewed trade tensions between the United States and China, warning that a prolonged dispute could slash global GDP by up to 7% in the long term.
U.S.-China Trade Conflict Poses Global Risk, WTO Says
Speaking in an interview published by Reuters over the weekend, Okonjo-Iweala urged both economic superpowers to de-escalate their trade conflict to avoid far-reaching consequences for the global economy. Her comments follow a week of renewed hostilities, with China imposing fresh export restrictions on rare earth metals and the U.S. responding by slapping 100% tariffs on select Chinese imports starting next month.
“We’re obviously worried about any escalation in the U.S.-China tensions,” Okonjo-Iweala said. “Both countries understand the implications for the global economy.”
The WTO recently revised its forecast for global merchandise trade volume in 2026, slashing the estimate from 1.8% to 0.5% growth, citing long-term effects of U.S. tariffs imposed under former President Donald Trump. However, trade growth for 2025 was raised slightly to 2.4%, reflecting short-term optimism.
Up to 7% Global GDP Loss if Trade War Deepens
Okonjo-Iweala warned that a continued U.S.-China trade decoupling could fracture the global economy into rival trading blocs, inflicting severe damage — especially on developing countries.
“Any kind of decoupling that divides the world into two trading blocs would result in significant global GDP losses — up to 7%, and double-digit welfare losses for developing countries,” she said.
She reiterated these concerns during a meeting with G20 officials last Wednesday, stressing that there can be “no global financial stability without global trade stability.”
WTO Rules Still Hold, But Reforms Are Urgent
Despite the ongoing tensions and the rise of bilateral trade deals, Okonjo-Iweala highlighted that 72% of global trade is still governed by WTO rules, signaling that the multilateral system remains resilient.
“The rules-based multilateral system is proving resilient despite the most severe policy shock in eight decades,” she noted.
However, she acknowledged that the WTO itself needs urgent reforms to remain relevant and efficient. She called for structural changes that would allow the organization to adapt to modern challenges such as digital trade, green economy transitions, and global services trade.
“There’s absolutely no doubt that there are global problems that cannot be solved by any one country alone. You need global cooperation to do it, and that’s where multilateralism is still very relevant,” Okonjo-Iweala said.
Positive Engagement with the U.S.
The WTO chief also confirmed a productive meeting with newly confirmed U.S. Ambassador to the WTO, Joseph Barloon, who also serves as Deputy U.S. Trade Representative. She noted progress in the U.S. approach to the WTO, including the removal of the organization from a list of proposed funding cuts and discussions to settle U.S. arrears.
