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Division of global economy may cut world GDP by 7% — WTO
US-China trade war increases risk of global fragmentation
The Director-General of the World Trade Organization stated that the world is on the verge of a large-scale economic split, which could lead to a long-term reduction in global GDP by 7%. The warning came amid the Trump administration’s decision to impose 125% tariffs on imports from China, marking the most radical move in the history of US-China trade relations.
The US officially ended discussions on the TikTok deal, citing deteriorating diplomatic and economic relations with Beijing. This has become another signal of escalating conflict that goes far beyond tariffs, affecting technology, investment, and strategic industries.
According to the WTO head, a potential division of the global economy into two competing blocs — centered around the US and China — would lead to supply chain disruptions, increased costs, job losses, and slower growth across all regions. Developing countries, which rely on exports and international financing, will be hit especially hard.
According to preliminary WTO estimates, trade between the US and China could drop by up to 80% if the two sides do not return to negotiations and continue building up barriers. This creates the risk of a complete restructuring of the global trade system built after World War II.
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