Donald Trump's Trade War Will Cause 'Deep' Global Recession, Says WTO Director

The world is at risk of a trade war and deep recession because of President Trump's announced tariffs of 25 percent on steel on 10 percent on aluminum, World Trade Organization director-general Roberto Azevêdo said on Monday.

"It is clear that we now see a much higher and real risk of triggering an escalation of trade barriers across the globe," he said at a meeting of the whole WTO membership. "We cannot ignore this risk and I urge all parties to consider and reflect on this situation very carefully.

"Once we start down this path, it will be very difficult to reverse direction. An eye for an eye will leave us all blind and the world in deep recession. We must make every effort to avoid the fall of the first dominoes."

White House trade adviser Peter Navarro responded to criticisms by Azevêdo. "A lot of the problem has been the World Trade Organization, which is over 160 countries, and a lot of them simply don't like us and so we don't get good results there," he said on CNN's State of the Union. "But we are fair and reciprocal traders and the World Trade Organization I think needs to change with the times."

A U.S.-China trade war would be a tragedy says Bridgewater founder Ray Dalio. Getty Images

The president declared his intent to raise tariffs late last week and followed the announcement with a rapid succession of tweets in which he said a trade war would be "good" and "easy to win." White House press secretary Sarah Huckabee Sanders clarified on Monday that, "The president is very confident that if that's where we ended up [in a trade war] we certainly would win, but that's not the goal. The goal is to get free, fair and reciprocal trade and hope that other countries will join in."

.@PressSec to @jonkarl on Pres. Trump's statement that "trade wars are good and easy to win": Trump is confident U.S. would win trade war, "but that's not the goal. The goal is to get free, fair and reciprocal trade."

— ABC News Politics (@ABCPolitics) March 5, 2018

But European Commission president Jean-Claude Juncker said last week that the European Union would propose new tariffs on American products like Harley-Davidsons, Levi's jeans and bourbon. Canadian Foreign Minister Chrystia Freeland said Ottawa would also take "responsive measures" to the U.S. tariffs.

China has similarly vowed retaliation against the United States. "China does not want to fight a trade war with the United States, but we absolutely will not sit by and watch as China's interests are damaged," said Chinese Vice Foreign Minister Zhang Yesui at a press briefing.

Hedge fund billionaire Ray Dalio said Monday that a trade war would be a "tragedy," and "has the risk of tit-for-tat escalations that could have very harmful trade and capital flow implications for both countries and for the world."

While I’m not a geopolitical analyst, here’s my thinking based on the time I’ve spent in both the US and China. Take it with a grain of salt.

— Ray Dalio (@RayDalio) March 5, 2018

A number of Republican politicians typically in Trump's camp have also spoken out against the plan.

"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," Paul Ryan spokeswoman AshLee Strong said in a statement Monday. "The new tax reform law has boosted the economy, and we certainly don't want to jeopardize those gains."

President Trump responded to the statement by insisting that he wouldn't back down on his plans. "We've had a very bad deal with Mexico, very bad deal with Canada, it's called NAFTA," he told reporters. "Our factories have left our country, our jobs have left our country for many years."

We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!

— Donald J. Trump (@realDonaldTrump) March 5, 2018