International

Okonjo-Iweala Warns of ‘Catastrophic’ Impact from Trade War Tariffs

Published

2 months ago

Jan 23, 2025.

Okonjo-Iweala warns against retaliatory tariffs, calling them “catastrophic” for the global economy.
She recalls the Smoot-Hawley Tariff Act’s role in worsening the Great Depression.
Okonjo-Iweala urges nations to remain calm and explore other avenues to resolve trade disputes.

World Trade Organization (WTO) chief, Ngozi Okonjo-Iweala, has issued a strong warning against escalating trade tensions, urging countries to avoid a “catastrophic” tit-for-tat tariff war.

Speaking at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala addressed the rising global concerns over trade disputes, particularly amid recent threats from U.S. President Donald Trump to impose tariffs on China, the European Union, Mexico, and Canada.

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Okonjo-Iweala cautioned against knee-jerk reactions to tariff impositions, recalling the devastating economic consequences of the Smoot-Hawley Tariff Act of 1930, which exacerbated the Great Depression.

She reminded nations that such retaliatory tariffs could lead to devastating losses for the global economy.

“We are very much saying to our members at the WTO: you have other avenues,” she stated. “Even if a tariff is levied, please remain calm and avoid retaliating hastily.” She warned that the resulting trade war could spiral into a global economic crisis, echoing the dire consequences of past protectionist policies.

The WTO director-general emphasized the importance of diplomacy and careful negotiation in handling trade issues.

“If we continue with a tit-for-tat approach, we risk repeating history,” Okonjo-Iweala said. “Double-digit global GDP losses would be catastrophic.”