GENEVA/DAVOS – The head of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, warned on January 23 that retaliatory trade wars prompted by U.S. President Donald Trump’s tariff threats would severely harm global economic growth. Speaking at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala emphasized that escalating tariffs could lead to double-digit losses in global GDP, an outcome that would affect countries worldwide.
Okonjo-Iweala, who will begin her second term as WTO Director-General in 2025, drew parallels with the trade restrictions of the 1930s, specifically referencing the U.S. Smoot-Hawley Act, which triggered a global economic downturn. “If we have tit-for-tat retaliation, whether it’s 25 per cent tariff or 60 per cent, and we go to where we were in the 1930s, we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay,” she stated.
She urged WTO members to explore other avenues for dispute resolution, even if tariffs are imposed, and called for calm in the face of trade tensions. Okonjo-Iweala also noted that the WTO’s dispute resolution system has been partially incapacitated since 2019, due to U.S. vetoes of judge appointments to its top appeals court.
Okonjo-Iweala expressed cautious optimism regarding Trump’s decision to delay the imposition of tariffs on imports from countries such as Canada and Mexico, opting to initiate investigations into their trade practices instead.
At the same event, Brazil’s ambassador, Alexandre Parola, echoed concerns about the negative impact of politically motivated tariffs on the global trade system, warning that such actions could undermine international trade norms. He called on Washington to refrain from adopting tariffs in the first place, stressing the potential harm to the international rules-based system.