The World Trade Organization has warned about a possible trade war between the US and China. The global trade body argues that even though it understands Trump’s commitment to create jobs in the US through import tariffs, this could cause a domino effect that could derail the President’s goal completely.
Speaking to The Associated Press, head of the WTO Roberto Azevedo said that the tit-for-tat import tariffs between the US and China could escalate into an all-out trade war that would have massive consequences on the global economy. President Trump is leading efforts to impose tariffs on Chinese imports worth $150 billion. This has created a fear among investors that a trade war could be looming and has led to unstable financial market performance over the last few months.
On its part, China has responded with tariffs of its own targeting products such as soybeans and small aircrafts. Many analysts view the Chinese move as largely political as it affects states in the US that form Trump’s core support base.
Nonetheless, the WTO has often been criticized over its 23-year existence for lacking the required capacity to ensure free and fair trade in the world. President Trump, in particular, has complained about the WTO and has raised speculation that the US could leave the global trade body. According to Azevedo, there’s no risk at the moment for a possible US exit saying that there’s no clear indication that the US is thinking of withdrawing from the organization.
However, Azevedo seemed to agree that there’s need for a few changes in the World Trade body and on how the organization runs things. He said that the complaints about the inefficacy of the WTO have come from many countries, not just the US. Nonetheless, the head of the WTO maintained that the global trade organization still has a very important role to play in facilitating global trade, especially when it comes to mediation.
Azevedo confirmed that based on current estimates global trade is set to grow by 4.4 percent next year. However, he warned that the current trade war between the US and China could put these projections in serious jeopardy. Azevedo insisted that there are clear signs already that any possible escalation of the US-China trade tensions would have negative effects not just on the two countries but also on other organization members.
President Donald Trump has long maintained that there’s no trade war between Washington and Beijing. He thinks that the war was already lost a long time ago. Although trade experts believe that there’s a need to restructure trade relations between the US and China, many remain doubtful whether tariffs are the right way to do this.
In an earlier address this week, the Chinese President Xi Jinping struck a reconciliatory tone on current tensions when he removed some of the tariffs imposed on US automotive exports to China. The move was also welcomed by Washington paving the way for potential negotiations moving forward.