UAE reaches 26 trade agreements under economic partnership initiative

RIYADH: A full-blown trade war between the US and China could divide the global economy into rival blocs and slash worldwide growth by 7 percent in the long term, the World Trade Organization said. 

WTO Director-General Ngozi Okonjo-Iweala stated that bilateral trade between the world’s two largest economies could plummet by as much as 80 percent, with far-reaching consequences. 

This comes as President Donald Trump announced sweeping import taxes on all goods entering the US, marking a major shift in trade policy. While introducing a temporary 90-day pause for some countries, he raised tariffs on Chinese goods to 125 percent, citing a “lack of respect” after Beijing hit back with its own 84 percent levy on US imports. 

Okonjo-Iweala said: “This tit-for-tat approach between the world’s two largest economies — whose bilateral trade accounts for roughly 3 percent of global trade — carries wider implications that could severely damage the global economic outlook.” 

She added: “A division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7 percent.” 

Developing nations, particularly least-developed countries, would bear the brunt of the fallout. 

“Trade diversion remains an immediate and pressing threat, one that requires a coordinated global response,” Okonjo-Iweala emphasized, urging WTO members to resolve disputes through dialogue.  

The policy shift, first announced on April 2 and revised on April 10, signals a sharp escalation in trade tensions and a renewed push for Trump’s “America First” agenda. 

“In many cases, the friend is worse than the foe in terms of trade,” Trump said at a White House briefing on April 2, criticizing allies like Mexico and Canada for what he called unfair trade practices. 

He later suspended most of the tariffs on Wednesday, reverting to a universal 10 percent rate — except for China, which now faces 125 percent tariffs, up from 104 percent. “Based on the lack of respect China has shown to the World’s Markets, I am hereby raising the Tariff charged to China to 125 percent,” Trump wrote on Truth Social. 

The announcement triggered a historic stock market rally, with the Dow surging 7.87 percent, its best performance in five years, while the S&P 500 and Nasdaq jumped 9.5 percent and 12.2 percent, respectively. 

The WTO has repeatedly cautioned against unilateral trade measures, stressing that a rules-based trading system is critical to global stability. With China vowing retaliation, the risk of further escalation looms — a scenario Okonjo-Iweala warns could derail the fragile post-pandemic recovery. 

“WTO members have agency to protect the open, rules-based trading system,” she said. “Resolving these issues within a cooperative framework is essential.” 

SINGAPORE: Oil prices retreated on Thursday as US President Donald Trump ramped up a trade war with China, even as he announced a 90-day pause on tariffs aimed at other countries.

Brent futures fell 39 cents, or 0.6 percent, to $65.09 a barrel by 9:30 a.m. Saudi time, while US West Texas Intermediate crude futures dropped 29 cents, or 0.5 percent, to $62.06.

Following the tariff pause for most countries, the benchmark crude contracts had settled 4 percent higher on Wednesday after dropping as much as 7 percent during the session.

Trump, however, raised the tariff rate for China to 125 percent effective immediately, from the previously announced 104 percent tariff that had kicked off earlier on Wednesday.

The higher US tariffs on China leave plenty of uncertainty in the markets, ING commodities strategists said in a research note on Thursday.

“This uncertainty is still likely to drag on global growth, which is clearly a concern for oil demand,” they said.

“The ICE Brent forward curve is signalling a better-supplied oil market,” the strategists said, with ICE Brent shifting into contango from the January 2026 contract onwards.

China also announced an additional import levy on US goods, imposing an 84 percent tariff from Thursday.

“We may expect oil prices to resume its broader downward trend once the optimism around the recent tariff reprieve fades,” said Yeap Jun Rong, market strategist at online trading platform IG.

“Demand-side headwinds persist, with China’s growth outlook at risk from the ongoing tit-for-tat,” Yeap said.

Investors were eyeing mixed supply drivers as well.

“Prices also found some support after the Keystone Pipeline declared force majeure on scheduled oil shipments,” said ANZ Research analysts on Thursday, noting though there were downside risks on signs of surging supply from OPEC members.

The Keystone oil pipeline from Canada to the US remained shut on Wednesday following an oil spill near Fort Ransom, North Dakota, while plans to return it to service were being evaluated, its operator South Bow said.

Elsewhere, the Caspian Pipeline Consortium resumed loading oil at one of two previously shut Black Sea moorings, it said on Wednesday, after a court lifted restrictions put on the Western-backed group’s facility by a Russian regulator.

In the US, crude inventories rose by 2.6 million barrels in the week to April 4, the Energy Information Administration said, nearly double the expectations in a Reuters poll for a 1.4-million-barrel rise.