An intensifying trade war between the U.S. and China is negatively impacting every country in the world, according to the director-general of the World Trade Organization (WTO), with workers earning lower salaries most likely to be hit the hardest.
The world’s two largest economies have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
Earlier this month, tensions between Washington and Beijing ratcheted up even further when both sides hiked charges on their goods once again. The U.S. also added Chinese telecom giant Huawei to it’s so-called “Entity List” — effectively banning the company from acquiring technology from U.S. firms without government approval.
This trade war is “holding back” investors and consumers and that’s hurting the expansion of the global economy, Roberto Azevedo, the director-general of the WTO, told CNBC’s “Street Signs” on Thursday.
“We cannot close our eyes to that… Every single country will lose unless we find a solution for this.”
“The regular citizen is not immune to this, in fact, the lower the bracket of income of the citizen, the more he will be affected,” Azevedo said.
The ‘new cold war’
U.S. Trade Representative Robert Lighthizer is poised to meet with officials from the European Union and Japan in France on Thursday. The meeting is set to address the non-market orientated policies and practices of other countries, with China widely expected to feature prominently in the discussions.
China and the U.S. have been locked in a protracted trade dispute since the early days of Trump’s presidency.
The U.S. president has previously claimed that China’s entry into the WTO had paved the way for the “greatest jobs theft in history.”
He also wants to cut America’s trade deficit with China, claiming it is hurting U.S. manufacturing.
But, despite several rounds of trade talks in recent months, Washington and Beijing have failed to reach a comprehensive agreement to end the dispute.
Willem Buiter, special economic adviser at Citi, told CNBC’s “Squawk Box Europe” on Thursday that he was pessimistic about the chances of a trade resolution over the coming months.
“This trade conflict is part of a much wider economic conflict… and that wider economic conflict is in turn embedded in a geopolitical conflict,” Buiter said.
“This conflict, even if this particular trade issue is settled, will come to revisit us because this is the new cold war,” he added.