WTO: US-China trade war would have 'severe' economic impact

A fully-fledged trade war between China and the US would have "a severe impact on the global economy", the World Trade Organisation head has told the BBC.

There was a risk global growth could fall "very quickly", WTO director-general Roberto Azevedo warned.

His comments follow the US and China announcing proposed tariffs against one another, as Washington and Beijing ramp up the rhetoric on trade.

The WTO now faced one of its toughest periods, Mr Azevedo said.

Last week US President Donald Trump announced proposed tariffs on $60bn worth of Chinese goods.

Beijing responded saying it was not afraid of a trade war, but that negotiations should remain open.

The US has since said it was "cautiously hopeful" that the two economic giants could come to an agreement on trade issues.

'Serious'

Mr Azevedo told the BBC's HardTalk program that while a global trade war had not yet been initiated, the world was "seeing the first movements towards it".

Earlier this month the US announced broader tariffs on steel and aluminium imports which affected many nations including China. Beijing responded with its own set of proposed tariffs.

The scale of damage done to the global economy, and its rate of expansion, would depend on what the trade war encompassed, Mr Azevedo said.

"If it's just limited to steel and aluminium, it's one thing. If you're talking about hundreds and thousands of products, it's a completely different thing. And the impact will be significantly different."

But he said there was little doubt that the trade clash was a "big problem".

"I don't think anybody believes that this is something minor, even in the US administration.

"These conversations are ongoing precisely because people are beginning to understand, I hope, how serious this is and the kind of impact this could have to the global economy."

'Catastrophe'

Washington has also has launched a complaint against China for breaking basic patent rights rules at the WTO - a body that Mr Trump has said is a "catastrophe" and "a disaster" for the US.

Mr Azevedo said the clashes between the US and China were some of the most difficult moments the WTO had faced in its 23 year history.

"If not the toughest, one of the toughest, yes for sure," he said.

"Given the nature of the challenges before the [WTO] system, where it comes from and so on, it's really tough right now."

But he said that despite some rhetorical statements that pointed towards the US wanting to leave the WTO altogether, there was no indication this was going to happen and that there were "still conversations ongoing and still negotiations ongoing".

"Now that doesn't mean that we should downplay that - you don't want to be in the war," he said.

"We want to avoid the war so everything that we can do to avoid being in that situation, we must be doing at this point."