Global Economy Faces Severe Hit from U.S.-China Trade Tensions

The World Trade Organization warns that the U.S.-China trade tensions could slash trade between the two by up to 80%, potentially reducing global GDP by nearly 7%. This economic rift risks creating two separate blocs, damaging the global economy significantly.

The World Trade Organization has issued a stark warning regarding ongoing U.S.-China trade tensions, forecasting that the dispute could shrink trade in goods between the two economic giants by as much as 80%.

This 'tit-for-tat' dynamic between the United States and China, which collectively make up approximately 3% of global trade volume, is poised to damage the broader economic landscape as it continues to unfold. The WTO's analysis suggests that this division could lead to the formation of separate economic blocs, potentially slashing global real GDP by nearly 7% if unresolved.

The organization released its preliminary estimate as U.S. President Donald Trump escalated tariffs on certain Chinese imports, although he postponed implementing some trade restrictions for a 90-day period. This development highlights the critical need for resolution to avoid long-term global economic repercussions.

(With inputs from agencies.)