Ngozi Okonjo-Iweala, the Director-General of the World Trade Organization (WTO), has urged the United States and China to de-escalate their growing trade tensions. She warned that if these two economic giants continue on a path of confrontation, the consequences could be devastating for the global economy.
Speaking at a recent global summit, Okonjo-Iweala cautioned that a prolonged trade standoff, or a complete severance of economic ties between the U.S. and China, could lead to a contraction of the world’s gross domestic product (GDP) by up to 7 percent. Such an outcome would not only slow growth in developed nations but would hit developing countries hardest, with some facing income and living standard declines exceeding double digits.
She emphasized that the escalating discord is already causing significant disruptions to international commerce, global supply chains, and investment patterns. Nations heavily reliant on trade may face rising costs, slower economic momentum, and fewer job opportunities if tensions continue unabated.
Okonjo-Iweala warned against the dangers of a sustained “economic decoupling,” where the U.S. and China attempt to isolate their markets from one another, potentially fracturing the global trade architecture. “When the world’s two largest economies are at odds, the shockwaves are felt across every market,” she explained. “This results in diminished trade activity, higher costs, and weakened cooperation at a time when global solidarity is vital to tackle issues like climate change and economic recovery.”
She called on the global community to prevent the situation from spiraling out of control, highlighting that the current challenges also offer a unique opportunity to rethink and strengthen the international trade system. Okonjo-Iweala encouraged WTO members to use this moment to reform trade rules, ensuring they are fairer and that global commerce supports all countries, especially smaller and less wealthy nations that depend heavily on exports.
Stressing the value of multilateral cooperation, she underscored that working together within the WTO framework remains the most effective path forward. She cautioned against protectionism and unilateral trade barriers, which risk deepening divisions in the global economy.
“The global trade system was established to prevent such fragmentation,” she remarked. “Instead of retreating into isolationism, countries should collaborate to modernize the WTO, improve dispute settlement processes, and foster trade that is both inclusive and sustainable.”
Her comments come amid renewed strains between Washington and Beijing over issues such as tariffs, technology transfer policies, and market accessibility. The U.S. has accused China of unfair trade practices and intellectual property violations, while China argues that American measures are designed to impede its economic progress.
Experts warn that failure to reach a compromise could disrupt supply chains across industries from electronics to agriculture, affecting companies and consumers worldwide.
In conclusion, Okonjo-Iweala stressed that cooperation, rather than confrontation, is crucial to sustaining a stable and prosperous global economy.