A real trade war between China and the United States will have a heavy impact on the global economy, according the Director General of the World Trade Organization (WTO). There is a risk that global growth will slow down “very quickly”, said Roberto Azevedo.
His comments follow the US and China announced tariffs for one another after Washington and Beijing have stepped up their rhetoric in terms of trade. The WTO now faces one of its most difficult times.
Last week, the US President Donald Trump announced tariffs on Chinese goods worth up to 60 billion USD.
Beijing replied, saying that they are not afraid of a trade war, but that the talks should remain open.
Later, the United States said they were “carefully convinced” that the two economic giants would reach a deal on trade issues.
According to Roberto Azevedo, although a global trade war has not yet started, the world “sees the first steps in that direction”.
Earlier this month, the United States announced introducing a customs duties on imports of steel and aluminum, which affected many countries, including China. Beijing responded with its own set of proposed duties. The magnitude of the damage to the global economy and its rate of expansion will depend on what the trade war involves.
“If it is restricted to steel and aluminum only, it’s one. If we are talking about hundreds and thousands of products, it is quite different. And the influence will be significantly different”, said Azevedo. But he does not think anyone thinks that a commercial collision would be a “big problem”. “I do not think anyone believes this is a small thing, even in the US administration. These negotiations continue precisely because people are beginning to understand, I hope, how serious this is and what impact the global economy will have”, added the Director General of the World Trade Organization.
According to Azevedo, clashes between the US and China are among the most difficult moments facing the WTO in its 23-year history.
“If not the toughest, certainly some of the toughest”, said he. “Given the nature of the challenges facing the WTO system, where it comes from, and so on, it is really difficult now”, added Roberto Azevedo. He added, however, that despite some statements indicating that the US wants to leave the WTO as a whole, there are no indications that this will happen.