The Director-General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, has urged the United States and China to calm rising trade tensions, warning that the ongoing conflict between the two economic giants could seriously harm the global economy.
Speaking at a recent forum, Okonjo-Iweala stated that if the trade dispute persists and both countries sever all economic ties, the world could lose up to 7 per cent of its total economic output (GDP). She explained that such a breakdown would not only slow down growth in wealthy nations but also hit developing countries the hardest, with some facing double-digit losses in income and welfare.
According to her, the growing divide between the U.S. and China, the world’s two largest economies, has already begun to affect global trade flows, supply chains, and investment patterns. Many countries, especially those that rely heavily on trade, could face higher prices, slower growth, and fewer job opportunities if the standoff continues.
Okonjo-Iweala warned that a prolonged “economic decoupling,” where the U.S. and China attempt to completely separate their economies, could create deep divisions in global trade. “When the two biggest economies in the world are at odds, the entire global trading system feels the impact,” she said. “The result is slower trade, higher costs, and less cooperation at a time when we need unity to tackle shared challenges like climate change and economic recovery.”
Read also: U.S. and EU avert trade war with 15% tariff deal
She said the world should not let the situation spiral out of control, stressing that the current crisis is also an opportunity for countries to rethink and strengthen the global trading system. She called on WTO member nations to use this moment to reform trade rules, make them fairer, and ensure that global trade benefits everyone, especially smaller and poorer countries that depend on exports to survive.
Okonjo-Iweala emphasised that multilateral cooperation, where countries work together under the WTO’s framework, remains the best path forward. She urged nations to avoid protectionist policies and unilateral trade barriers that could further divide the global economy.
“The global trading system was built to prevent exactly this kind of economic fragmentation,” she said. “Instead of turning inward, countries should come together to modernise the WTO, strengthen dispute resolution, and make trade more inclusive and sustainable.”
Her comments come amid renewed friction between Washington and Beijing over tariffs, technology, and market access. The U.S. has accused China of unfair trade practices and intellectual property violations, while China says American policies are aimed at slowing its rise as an economic power.
Experts warn that if both sides fail to reach common ground, global supply chains from electronics to food could suffer disruptions, affecting businesses and consumers worldwide.
Okonjo-Iweala concluded by saying that cooperation, not confrontation, is the only way to secure a stable and prosperous global economy.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
