WTO Chief Ngozi Okonjo-Iweala Warns Against Tit-For-Tat Tarrifs Measures

World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has urged nations to remain calm and avoid escalating trade tensions through retaliatory tariffs.

Speaking during a panel discussion at the World Economic Forum in Davos, Switzerland, Okonjo-Iweala cautioned against the dangers of a tit-for-tat trade war, warning that such actions could have devastating consequences for the global economy.

Her remarks came during a week when tariff threats were making headlines, with the U.S. President signaling potential tariffs on trade partners, including China, the European Union, Mexico, and Canada. Against this backdrop, Okonjo-Iweala urged global leaders to avoid knee-jerk reactions, saying:

“Let’s not hyperventilate. I understand we’re here to discuss tariffs, but I’ve been reminding everyone: could we chill a little? I’m sensing a lot of unnecessary panic.”

Drawing historical parallels, she highlighted the disastrous impact of the 1930 Smoot-Hawley Tariff Act, which deepened the economic woes of the Great Depression. The act led to widespread retaliation from trade partners, exacerbating an already fragile global economic situation.

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Okonjo-Iweala emphasized the importance of using alternative avenues to resolve trade disputes. She encouraged WTO members to approach tariff challenges with measured responses, warning against immediate retaliation without proper analysis and groundwork.

“If we resort to tit-for-tat measures — whether it’s 25 percent tariffs, 60 percent, or more — and return to the kind of protectionism seen in the 1930s, the consequences will be dire. We could face double-digit losses in global GDP, which would be catastrophic,” she stated.

Her message to policymakers was clear: prioritize dialogue and collaboration over confrontation. Okonjo-Iweala underscored the WTO’s role as a platform for constructive engagement, urging nations to use diplomatic tools rather than escalating tensions.

AFP