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The World Trade Organization (WTO) has issued a dire warning about the escalating trade tensions between the United States and China, projecting a potential decrease in bilateral merchandise trade of up to 80%. According to Ngozi Okonjo-Iweala, WTO Director General, this contraction poses a significant risk not only to the two economies but also to global trading dynamics, particularly affecting lesser-developed nations.
The WTO's preliminary estimate emerged on April 10, 2025, coinciding with increased tariffs imposed by U.S. President Donald Trump on Chinese imports, although some tariffs have been deferred for 90 days. The organization emphasized that continued escalation of these trade disputes could lead to a “decoupling” of the two largest economies in the world, contributing to a fragmentation of global trade.
The economic ramifications could be severe, with projections suggesting a long-term reduction in global real GDP of nearly 7 percent. In response, China's mission to the WTO confirmed the filing of an additional complaint regarding U.S. tariffs, highlighting ongoing tensions in the trade relationship.