The World’s GDP will suffer double-digit losses and everyone will pay for it, Ngozi Okonjo-Iweala said.

On Thursday, the European Commissioner for Economic Affairs and Productivity, Valdis Dombrovskis, and the head of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, joined their voices at the Davos Forum to try to prevent the protectionist wave coming from the US from leading to a trade war.

RELATED:

Germany Ready to Retaliate Against U.S. Tariffs

“If we return to the mutual imposition of retaliatory tariffs as there was also in the 1930s, the world’s gross domestic product will suffer double-digit losses and everyone will pay for it,” warned Ngozi in a debate where diplomats from China, Japan, the US and Brazil were also present.

“Even if the scenario is different, one of a trade broken into two blocks, we will lose 6.4% of the real global GDP, a figure similar to the economies of Japan and South Korea together,” warned the WTO director.

Dombrovskis said that the greatest economic achievement of the European Union (EU) throughout its history has been precisely the free movement of products, services, workers and capital, which has benefited all members. “Economically isolated countries are not prosperous. History shows us that protectionism and economic fragmentation in the 1930s contributed to the Great Depression,” he said.

Ngozi insisted that the tariff threats of U.S. President Donald Trump have not yet materialized because his administration has only initiated investigations into the US trade imbalance. Therefore, she called for calm at a time when global trade is at record levels, US$30.4 trillion in 2024.

“I’m not saying I’m not worried, but it’s better not to hyperventilate, calm down and breathe deeply,” said the WTO director, who urged economies that, even if U.S. tariffs were to become a reality, they should not be immediately responded to with even higher tariffs.

“Using tariffs as a political tool is attractive,” admitted Ngozi, who nevertheless expressed hope that it is a simple negotiating maneuver by Trump, since these tariffs can distort the economy by shifting resources from one sector to another.

“They are often used to solve problems that trade is unfairly accused of, and if you look at trade deficits, you often see that they come from economic imbalances, for example in domestic consumption,” she said, noting that the imposition of tariffs on imports “can temporarily reduce the deficit but in the long run bring problems such as inflation, or make exports less competitive.”

Dombrovskis added that the United States and the European Union are strategic allies and together account for 42% of the world’s GDP, so they must work together in a spirit of cooperation.

The European commissioner nevertheless defended the imposition of tariffs and other trade-restrictive measures in certain cases, such as those that Brussels has dictated for reasons of strategic security in certain sectors or to support the reduction of emissions that lead to global warming.

“The world has worked hard throughout history to lower tariffs and this approach has stimulated global trade to the benefit of all countries,” concluded Ngozi, who encouraged the U.S. and China to negotiate their trade imbalances in the same spirit with which Washington and Tokio resolved differences in similar conflicts in the 1970s and 1980s.

teleSUR/ JF Source: EFE

EN ESTA NOTA: