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WTO warns over US-China trade war

April 12, 2018

The World Trade Organization has forecast strong global trade growth this year but has warned that any further escalation in trade tensions between the United States and China could compromise those gains.

Containers are seen at the Yangshan Deep Water Port, part of the Shanghai Free Trade Zone, in Shanghai
Image: Reuters/Aly Song

The world trade in goods would grow 4.4 percent this year, above the post-financial-crisis average of 3 percent, the World Trade Organization said in its annual forecast on Thursday.

But the global recovery might falter as a result of tit-for-tat restrictive trade measures, notably between the US and China.

Read more: Did Donald Trump really just launch a trade war with China?

"This important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation," WTO Director-General Roberto Azevedo said in a statement.

"A cycle of retaliation is the last thing the world economy needs."

WTO Director-General Roberto Azevedo
WTO head Roberto Azevedo has warned against tit-for-tat restrictive trade measuresImage: picture-alliance/dpa/KEYSTONE/S. Di Nolfi

Last month, US President Donald Trump unveiled plans for tariffs on steel and aluminum imports from countries such as China. Trump followed it up with a proposal to impose punitive tariffs targeting $50 billion (€40.6 billion) worth of Chinese goods.

China responded by imposing its own tariffs on US goods and warned that it was ready to take further reciprocal measures if the US carried on with its protectionist policy.

Robust recovery

Last year global trade grew 4.7 percent — the highest level in six years, the WTO said. Global trade grew at an average of 4.8 percent in the 1990s.

The WTO expects trade growth to slightly ease in 2019 to 4 percent.

"These forecasts do not, and I repeat, they do not factor in the possibility of a dramatic escalation of trade restrictions," Azevedo told a news conference.

"It is not possible to accurately map out the effects of a major escalation, but clearly they could be serious," he said. "Poorer countries would stand to lose the most."

ap/hg (AP, AFP, Reuters)