World Trade Organisation (WTO) Director-General Ngozi Okonjo-Iweala has urged nations to remain calm over tariffs, warning that a tit-for-tat trade war would be “catastrophic” for the global economy.
Her appeal came during a panel discussion on tariffs at the World Economic Forum in Davos, Switzerland, following US President Donald Trump’s threats of tariffs against China, the European Union, Mexico, and Canada.
Okonjo-Iweala called for a measured response, saying: “Please let’s not hyperventilate. I know we are here to discuss tariffs, but I’ve been saying to everyone: could we chill a little? I just sense a lot of hyperventilation.”
She referenced the negative impact of the Smoot-Hawley Tariff Act of 1930, which worsened the global economic crisis due to retaliatory measures.
“We are telling WTO members: there are other ways to address issues. Even if a tariff is imposed, please remain calm. Don’t retaliate immediately without proper consideration,” she added.
“If we engage in tit-for-tat retaliation, whether it’s 25 percent or 60 percent tariffs, we could face double-digit global GDP losses. That would be catastrophic.”