Global economy in jeopardy because of trade war between US, China and EU, warns WTO

International trading system at 'potentially large risk' from tit-for-tat sanctions between major economic powers

Ben Chapman
Wednesday 04 July 2018 18:40
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Missouri soy farmers fear the implications of a trade war with China after Trump announces trade tariffs

An escalating trade war between China, the US and the EU is putting global economic growth in jeopardy and the effects are already beginning to show, the World Trade Organisation said on Wednesday.

Tit-for-tat sanctions between the major economic powers put the global trading system at "potentially large risk", the WTO said in its most damning assessment yet of the tariff war sparked by Donald Trump’s levies on imports of steel and aluminium.

China and the EU have both slapped their own retaliatory tariffs on billions of dollars of imports from the US with Beijing set to enact the latest round on Friday.

“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators,” WTO director general Roberto Azevedo said in a statement.

The WTO’s report looked at the group of 20 leading economies, known as the G20. It found that those countries enacted 39 new trade restrictions between mid-October last year and mid-May this year, affecting goods including iron and steel, plastics and vehicles.

The figure is double the number introduced in the previous seven-month period. “The marked increase in new trade restrictive measures among G20 economies should be of real concern to the international community,” Mr Azevedo said.

EU says it will 'react swiftly and appropriately' after Donald Trump trade war threat

The US president Donald Trump has implemented a series of tariffs as a warning to countries which he says treat America unfairly when it comes to trade.

International trade deals such as the North American Free Trade Agreement (Nafta) have been “very, very bad” for the US, Mr Trump has said.

But the WTO called on world leaders to de-escalate the situation to protect the economy.

“At a juncture where the global economy is finally beginning to generate sustained economic momentum following the global financial crisis, the uncertainty created by a proliferation of trade restrictive actions could place economic recovery in jeopardy,” the WTO report said.

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