The tit-for-tat tariff escalations between the United States and China would push the world’s two largest economies into a de facto “mutual embargo,” a situation that can only be resolved through face-to-face negotiations, according to Pascal Lamy, a former director-general of the World Trade Organization.
In adapting to the impact of the tariff war, China still needs to boost domestic demand and rebalance its growth model toward increased consumption — something it has not yet succeeded in doing, Lamy told Caixin in a recent interview. He warned that many countries feared Chinese exports will be redirected from the U.S. toward them because of China’s overcapacity.
