Okonjo-Iweala cautions against 'catastrophic' trade wars as Trump escalates tariffs

In a strong plea for global economic stability, World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala urged nations to exercise restraint in the face of rising tariff threats from U.S. President Donald Trump. Her remarks came during a high-profile panel discussion at the World Economic Forum on Thursday.

With Trump proposing significant tariffs on imports from countries such as China, Canada, Mexico, and the European Union, Okonjo-Iweala warned against the domino effect of retaliatory trade measures. “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 remarked.

The WTO chief emphasized the economic risks of escalating trade conflicts, referencing the devastating trade wars of the 1930s. “If we have tit-for-tat retaliation—whether it’s 25 percent tariffs, 60 percent—and we go to where we were in the 1930s, we are going to see double-digit global GDP losses. That’s catastrophic,” she cautioned.

Trump’s aggressive trade stance includes threats of a 10% tariff on Chinese imports and a 25% tariff on goods from Canada and Mexico. Additionally, he has warned Russian President Vladimir Putin of tariffs should the Ukraine invasion persist.

In response, Okonjo-Iweala urged WTO members to consider alternative strategies and avoid reactionary measures.

“Even if a tariff is levied, please keep calm. Don’t wake up and, without the necessary groundwork, levy your own,” she said, emphasizing the importance of collaboration and dialogue.

Meanwhile, Canada has vowed to defend its economic interests, preparing potential retaliatory measures against Trump’s proposed tariffs. Tensions are mounting as nations brace for the potential economic disruptions that could ripple across global markets.

The WTO continues to advocate for solutions that prioritize global stability, underscoring the critical need for multilateral engagement in resolving trade disputes.