Dr Ngozi Okonjo-Iweala, Director-General of the World Trade Organisation (WTO), has issued a caution about the escalating global trade tensions, particularly the rising tariffs, which she warns could have severe consequences for the world economy.
Last week, the United States introduced new trade restrictions on various countries, prompting concerns of retaliation from major global players. This has fueled fears of a potential trade war.
Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), echoed Okonjo-Iweala's concerns, urging the United States and its trade partners to collaborate in resolving the issues surrounding the tariffs imposed by President Donald Trump's administration.
A 10% "baseline" tariff on most imports to the US came into effect on Saturday, with higher taxes expected for several countries from April 9. Africa faces a 14% import tariff, meaning Nigeria falls into this category.
Okonjo-Iweala expressed her concern, stating that the WTO Secretariat is closely monitoring the situation. She highlighted that the combined impact of these measures could lead to a 1% contraction in global trade, a downward revision from earlier projections.
"The recent announcements will have substantial implications for global trade and economic growth," she said. "Our estimates indicate a potential contraction of 1% in global merchandise trade volumes this year, down from earlier projections."
She also warned of the dangerous potential for a tit-for-tat tariff spiral, which could further damage trade. "I'm deeply concerned about this decline and the potential for escalation into a tariff war," she said.
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Despite these developments, Okonjo-Iweala noted that most global trade still operates under WTO protections, with 74% of global trade still following Most-Favored-Nation (MFN) terms, down from 80% earlier this year. She urged WTO members to work together to safeguard these gains.
Through her official X account, she summed up her position with a strong warning: "We need to avoid a tit-for-tat tariff war. This will be destructive for the global economy."
Her comments mirror those she made earlier in the year at the World Economic Forum, where she emphasized the importance of not overreacting to tariff threats, particularly those from the United States. She recalled the lessons of the 1930s Great Depression, when retaliatory tariffs deepened the global economic downturn.
"The potential for global GDP losses is catastrophic if we repeat the mistakes of the 1930s," she warned.
The IMF also weighed in, with Georgieva noting that the tariff measures present a significant risk to the global economy, particularly at a time of sluggish growth. She appealed for cooperation to resolve the trade tensions.
Economist Ayo Teriba, CEO of Economic Associates, discussed the impact of the tariffs on Nigeria's financial sector. He warned that falling equity prices could lead to significant losses for Nigerians with investments in global companies, and that capital flight could weaken the exchange rate and harm the local forex market.
Teriba also noted that investors might turn to gold to safeguard their investments as the crisis deepens, further exacerbating the pressure on the economy.
Meanwhile, the Indonesian government has stated that it will not retaliate against Trump's tariffs, opting instead to pursue negotiations. Countries such as the UK have also refrained from imposing reciprocal tariffs, while others, like China, have already announced counter-measures.
