Everyone will feel it: the WTO assessed the consequences of the escalation of the trade war between the US and China
10 April 12:21
The division of the global economy into two blocks could lead to a long-term reduction in global real GDP by almost 7%. This statement was made by the Director-General of the World Trade Organization, Dr. Ngozi Okonjo-Iweala, Komersant ukrainskyi reports.
Preliminary WTO forecasts show that trade in goods between the world’s two largest economies could decline by 80%.
According to Ngozi Okonjo-Iweala, the tit-for-tat approach between the two economies, whose bilateral trade accounts for approximately 3% of world trade, has broader implications that could seriously damage the global economic outlook.
“Our assessments based on recent events emphasize the significant risks associated with further escalation. And the negative macroeconomic consequences will not be limited to the United States and China, but will spread to other economies, especially the least developed countries. The potential fragmentation of global trade along geopolitical lines is of great concern,” said Ngozi Okonjo-Iweala.
She believes that the division of the world economy into two blocks could lead to a long-term reduction in global real GDP by almost 7%.
In addition, trade diversion remains an immediate and acute threat, and this, as the WTO emphasizes, requires a coordinated global response. They called on all members of the organization to solve this problem through cooperation and dialogue.
As a reminder, on April 2, the day the great trade war began, the United States imposed a 34% duty on Chinese goods, but China responded with its own 34%, and Trump struck again, imposing an additional 50% duty. Together with the 20% duty imposed earlier, the total customs penalty for China reached 104%. And Donald Trump did not stop there.
After Beijing imposed an 84% duty on all US imports, promising to “fight to the end,” Trump raised duties on China to 125%, while tellingly introducing a 90-day pause with reduced duties for countries that did not respond to Washington’s tariffs.
“Because of the lack of respect China has shown for global markets, I am raising the tariff levied by the United States on China to 125%, effective immediately,” the US president wrote on Truth Social.
Beijing is preparing for a protracted confrontation with Washington, using currency as a tool of influence. According to Bloomberg, China is allowing the yuan to weaken against almost all major currencies to support its exports amid the deepening trade war with the United States.
On Thursday, the international yuan fell to a level last seen during the global financial crisis against the US dollar. The yuan also fell to a 15-month low against a basket of currencies of its trading partners. Expectations of a yuan depreciation increased after the People’s Bank of China began to ease its base rate.
According to the Financial Times, China is assembling a “national team” to fight on the front lines of the trade war.
