WTO Chief Warns of Trade Instability if Trump Revives Tariffs

WTO chief warns Trump's proposed tariffs could destabilize global trade, urges caution and multilateral resolution of disputes.

Salman Khan
New Update
WTO Chief Warns of Trade Instability if Trump Revives Tariffs

WTO Chief Warns of Trade Instability if Trump Revives Tariffs

Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization (WTO) , has urged caution and restraint if former U.S. President Donald Trump follows through on his pledge to impose a 10% import tariff upon returning to the White House. Okonjo-Iweala warned that such unilateral actions could destabilize the global trading system and lead to retaliatory measures from other nations.

"If President Trump does impose these tariffs, I think it will be a lose-lose situation," Okonjo-Iweala said in an interview. "It will upend the stability and predictability of trade, and no one will win in the end." She emphasized the importance of resolving trade disputes through the WTO's established mechanisms rather than resorting to unilateral tariffs.

During his presidency from 2017 to 2021, Trump imposed tariffs on imports from several countries, particularly China, in an effort to reduce the U.S. trade deficit. However, the policy largely failed to change the trade balance between the world's two largest economies. While President Joe Biden has maintained some pressure on China, he has worked to calm trade relations with European allies.

Why this matters:The potential revival of Trump's tariff threats could reignite trade tensions and further strain the global economy, which is already contending with the ongoing effects of the COVID-19 pandemic. Increased tariffs could drive up inflation and create economic instability, posing challenges for policymakers worldwide.

Economists have warned that Trump's proposed tariffs, including a 60% duty on Chinese imports and a 10% tariff on goods from other countries, could push inflation above the Federal Reserve's target. "These tariffs would be a major shock to the global economy at a time when many countries are still recovering from the pandemic," said trade expert Esther Lee. "It's essential that nations work together through the WTO to address trade issues, rather than taking unilateral actions that could harm everyone."

Okonjo-Iweala stressed that the WTO remains committed to facilitating dialogue and negotiation among its member countries to resolve trade disputes and promote fair, rules-based trade. "We need to keep a cool head and focus on strengthening the multilateral trading system," she said. "That's the best way to ensure stability, predictability, and prosperity for all."

Key Takeaways

  • WTO chief warns Trump's proposed 10% import tariff would be "lose-lose" for global trade
  • Tariffs could destabilize global trade, lead to retaliation from other nations
  • Trump's past tariffs failed to reduce U.S. trade deficit with China
  • Proposed tariffs could drive up inflation and harm economic recovery
  • WTO calls for resolving trade disputes through multilateral dialogue, not unilateral actions