WTO Chief Warns of Catastrophic Impact of Trade Wars, Urges Against Retaliation
GENEVA/DAVOS, Switzerland, Jan 23 (Reuters) - A trade war triggered by US President Donald Trump's tariff threats would have devastating consequences for global growth and retaliation should be avoided, World Trade Organization Director-General Ngozi Okonjo-Iweala said on Thursday.
Okonjo-Iweala, a former Nigerian finance minister, began her second year leading the global trade watchdog as Trump's threats have raised the specter of trade wars.
"If we have tit-for-tat retaliation, whether it's 25% or 60%, and we go back to where we were in the 1930s, we are going to be looking at double-digit losses in global GDP. It's catastrophic. Everybody will pay," the WTO chief said at the World Economic Forum's annual meeting in Davos, Switzerland.
Okonjo-Iweala drew parallels with the interwar period when countries adopted protectionist trade measures in response to the 1930 U.S. tariff act.
"We have seen this movie, as I said, once before in the 1930s with the Smoot-Hawley Act. It made things worse," she said.
"We are very much saying to our members in the WTO that you have other avenues, even if a tariff is imposed, to please keep your cool," she said, urging nations to consider their options and use the organization's system for resolving disputes.
That system has been only partially functional since late 2019 when Trump's repeated blocking of appointments has crippled its top appeals court.
Okonjo-Iweala said she was "encouraged" by Trump's decision to hold off on immediate tariff hikes on imports from countries including Canada and Mexico, opting instead to order investigations into trade practices.
(Reporting by Emma Farge; Editing by David Gregorio)