‘World on the brink of trade war’: WTO predicts unprecedented chaos from Trump’s tariff onslaught

The World Trade Organization (WTO) has issued a stark warning over the economic fallout emerging out of U.S. President Donald Trump’s sweeping new tariffs, which he announced earlier today. The WTO cautioned that the measures could trigger a damaging cycle of retaliation and shrink global trade by 1% this year—a sharp four-percentage-point downgrade from earlier projections.

In a strongly worded statement, WTO Director-General Dr. Ngozi Okonjo-Iweala expressed deep concern over the potential for a full-blown trade war, urging member nations to exercise restraint.

“These measures will have substantial implications for global trade and economic growth,” she said, emphasizing the risk of “a cycle of retaliatory measures that lead to further declines.”

A Return to Protectionism

Trump’s latest tariffs—a cornerstone of his “America First” agenda—mark a dramatic departure from decades of U.S. trade policy. Unveiled on April 2, the policy imposes a minimum 10% levy on imports from over 100 countries, with steeper penalties for nations deemed “worst offenders.” The European Union faces a 20% tariff, India 26%, while close allies like the UK are hit with 10%.

The White House argues the measures will revive U.S. manufacturing, counter “unfair” trade practices, and pressure foreign governments on issues like migration and drug trafficking. But trading partners have reacted with fury. The EU and China have vowed countermeasures, South Korea pledged an “all-out” response, and analysts warn of lasting diplomatic rifts with traditional allies.

WTO Sounds the Alarm

While the WTO acknowledged that 74% of global trade still flows under standard Most-Favored-Nation (MFN) terms—down from 80% at the start of the year—it warned that Trump’s tariffs could distort markets and spark trade diversion, where nations reroute goods to avoid duties, destabilizing supply chains.

“Trade measures of this magnitude create significant pressures,” Okonjo-Iweala said, calling for members to “manage the resulting tensions responsibly.” She stressed the WTO’s role as a forum for dialogue, urging nations to seek cooperative solutions rather than retaliation.

The WTO’s revised forecast reflects growing anxiety among policymakers. A 1% contraction in merchandise trade could wipe out billions in economic growth, exacerbating inflation and job losses worldwide, the organisation warned. Most importantly, emerging markets, already strained by geopolitical instability, may be hit hardest.