Amid escalating rhetoric on trade, World Trade Organisation (WTO) Director-General Ngozi Okonjo-Iweala has cautioned nations against engaging in retaliatory tariff measures, labeling such actions as potentially “devastating” for the global economy.
Speaking during a panel discussion at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala emphasized the critical need for restraint, as tensions rose following U.S. President Donald Trump’s latest pronouncements advocating for aggressive trade measures, including tariffs targeting China, the European Union, Mexico, and Canada.
“Let us not succumb to hysteria,” she urged, injecting a note of levity with her remark: “Can we just chill? It seems like everyone is on edge when it comes to tariffs.”
Drawing historical parallels, she referenced the Smoot-Hawley Tariff Act of 1930, a U.S. policy during the Great Depression that provoked widespread retaliatory actions and exacerbated the global economic downturn.
“We are advising WTO member states to explore alternative mechanisms. Even when faced with tariff impositions, measured and deliberate responses are paramount. Avoid the impulse to react precipitously,” Okonjo-Iweala remarked.
She warned of dire consequences should nations engage in tit-for-tat tariff escalation. “If we spiral into retaliation—25%, 60%, or more—we risk plunging back into a 1930s-style economic abyss, where double-digit losses in global GDP become an inescapable reality. Such an outcome would be nothing short of catastrophic.”
Her call for prudence serves as a stark reminder of the precarious balance the global trade system faces, urging world leaders to exercise diplomacy over confrontation.
