WTO warns of 80% trade decline between US and China
The World Trade Organization (WTO) has issued a stark warning, predicting that trade between the United States and China could plummet by as much as 80% this year due to escalating tariff tensions.
Both countries are vital trading partners for South Africa, making any downturn in their bilateral trade a potential disruptor to the country’s own export and import markets.
In its latest Global Trade Outlook and Statistics report, the WTO emphasises that rising tariff conflicts could force countries into one of two increasingly isolated economic blocs.
For South Africa, the implications are profound.
With the US and China being its top two trading partners, a slowdown in trade between the two giants could create significant ripple effects on local industries.
In 2024, total goods trade between South Africa and the US amounted to $20.5 billion, with South Africa exporting $14.7 billion and importing $5.8 billion.
The automotive industry alone saw South Africa export approximately $1.8 billion worth of vehicles to the US, making it the country's third-largest automotive export market.
Meanwhile, the citrus industry, which supports around 35,000 jobs, benefits from duty-free access under the African Growth and Opportunity Act (AGOA), further highlighting the importance of the US trade relationship.
Bilateral trade between South Africa and China reached a record $34.18 billion in 2023, an increase from $1.34 billion in 2000.
South Africa primarily exports mineral products, including ores and slag, to China, with 64% of its exports during the FOCAC era (2001–2023) comprising these commodities.
Additionally, products such as beef, citrus, red wine, oysters, and rooibos tea are vital exports to the Chinese market.
Director-General Ngozi Okonjo-Lweala stressed that the growing trade tensions between the US and China could disrupt global supply chains and stifle worldwide economic growth.
"We currently estimate that merchandise trade between the US and China will fall by 81% — a drop that would have reached 91% without recent exemptions for products like smartphones,” Okonjo-Lweala said.
“Thanks to those exemptions, the decline is slightly less severe, but a drop of this magnitude is virtually tantamount to a decoupling of the two economies.”
She went on to emphasize that despite US-China trade representing only about 3% of global merchandise trade, such a significant split between the two major economies could have far-reaching consequences.
"If this leads to broader fragmentation of the global economy along geopolitical lines into two isolated blocs, our estimates suggest global real GDP could drop by nearly 7% in the long term,” she warned.
“This would have significant implications, particularly for developing economies, which could face welfare losses in the double digits.
"This fragmentation is a phenomenon we’ve discussed before, and now we’re seeing it unfold. It’s one of the most worrying developments for us.”
Okonjo-Lweala further voiced concerns over the uncertainty surrounding trade policy, particularly in light of the US-China standoff.
While recent de-escalations of tariff tensions have provided some temporary relief, the uncertainty continues to pose a significant threat to global growth.
“The enduring uncertainty threatens to act as a brake on global growth, with severe negative consequences for the world, especially the most vulnerable economies,” she said.
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