Ngozi Okonjo-Iweala, the head of the World Trade Organization (WTO), urged countries on Thursday to maintain composure regarding tariffs, warning that a tit-for-tat trade war would be “catastrophic” for the global economy.
Her remarks came during a panel discussion on tariffs at the World Economic Forum in Davos, Switzerland, amidst rising tensions as US President Donald Trump threatened tariffs against China, the European Union, Mexico, and Canada.
Okonjo-Iweala emphasized the need for restraint, humorously stating, “Please let’s not hyperventilate. I know we are here to discuss tariffs. I’ve been advising everyone to chill as I sense a lot of hyperventilation.”
She referenced the repercussions of the Smoot-Hawley Tariff Act in the United States during the Great Depression of 1930, which led to retaliatory measures and exacerbated the global economic crisis.
“We are strongly advising our WTO members that there are alternative paths. Even if tariffs are imposed, please stay calm; do not react impulsively without the necessary groundwork,” she said.
She cautioned, “If we engage in tit-for-tat retaliation, whether it involves 25 percent tariffs or 60 percent, and revert to conditions reminiscent of the 1930s, we could face double-digit losses in global GDP. That would be catastrophic.”
Leave a Reply