Geneva: The World Trade Organization (WTO) estimated Wednesday that rising trade friction between the US and China could reduce trade between the two by as much as 80%. "The escalating trade tensions between the United States and China pose a significant risk of a sharp contraction in bilateral trade," WTO Director-General Ngozi Okonjo-Iweala said in a statement.

According to Anadolu Agency, Okonjo-Iweala emphasized that the tit-for-tat trade measures between the world's two largest economies could have far-reaching implications, potentially damaging the global economic outlook. Together, the US and China account for roughly 3% of global trade, and their ongoing tensions could severely impact international markets.

She further noted that the adverse effects of the trade conflict would not be limited to the US and China alone but could extend to other economies, particularly those that are least-developed. Okonjo-Iweala warned that a division of the global economy into two blocs could lead to a long-term reduction in global real GDP by nearly 7%.

The tensions escalated following US President Donald Trump's announcement last week of tariffs ranging from 10-50% on more than 180 countries, causing disruption in world markets. Initially, China was subjected to a 34% tariff on April 2, which later increased to a 50% additional tariff after it failed to withdraw its 34% retaliatory tariff on the US.

In a recent development, Trump increased the total tariff rate on China to 125%. Meanwhile, more than 75 nations received a 90-day reprieve from a Wednesday deadline, sparing them from tariffs that could exceed the 10% baseline, often by several multiples.