The World Trade Organization (WTO) has issued a stark warning that the intensifying trade conflict between the United States and China could reduce goods trade between the two economic giants by up to 80 percent.
In a statement released today, the WTO highlighted the global risks of this escalating tariff war. “This tit-for-tat approach between the world’s two largest economies, which together account for nearly 3 percent of global trade, poses a serious threat to the global economic outlook,” the organization said.
The WTO further cautioned that dividing the global economy into rival trade blocs could result in a long-term decline of almost 7 percent in global real GDP.
“Trade diversion remains an immediate and pressing threat, one that requires a coordinated global response. We urge all WTO members to meet this challenge through cooperation and dialogue,” the statement added, calling on nations to uphold an open international trading system.
The warning comes amid fresh tariff escalations by the U.S. and China. U.S. President Donald Trump has announced a 90-day reciprocal tariff pause for most countries—but notably excluded China. Tariffs on Chinese imports have been hiked sharply to 125 percent, effective immediately.
“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125 percent,” Trump declared via Truth Social.
In retaliation, China has increased tariffs on U.S. goods from 34 percent to 84 percent, effective Thursday. Beijing has accused Washington of undermining the multilateral trade framework and has called on the WTO to assess the global impact of the U.S. tariff measures.
With both nations hardening their positions, the global trading system faces increasing uncertainty and potential long-term damage, the WTO warned.
