Rising Bharat Summit 2025: US-China decoupling would be serious, says WEF chief Børge Brende

Børge Brende, President & CEO, World Economic Forum

The World Economic Forum’s President and CEO, Børge Brende, on Monday warned that escalating trade tensions between the United States and China could have far-reaching consequences for global growth, particularly at a time when the world is still struggling to return to pre-pandemic trend levels.

Speaking at the Rising Bharat Summit 2025, Brende described the proposed rise in US tariffs, from an average of 3 percent to the "mid-20s," as a “major change”, likely making them among the highest in the industrialised world. “Whether this reshapes the global economy will depend on what happens in the coming weeks,” he said, citing the example of Japan's Nikkei index jumping 6 percent amid talks with the US to ease tensions.

Brende also weighed in on the possibility of fresh tariff retaliation between the US and China, with former President Donald Trump threatening a further 50 percent tariff on Chinese imports, a move that could push total tariffs above 100 percent. China has already warned of countermeasures if the US proceeds.

He cautioned that a decoupling between the world’s two largest economies, which together account for nearly 45 percent of global GDP, would be “serious”. While China has reduced its reliance on the US, with exports to the American market falling from 20 percent to 12 percent, Brende said both sides still rely on each other in key areas.

“US companies could face higher production costs and inflation if input prices go up,” he noted, warning that this could trigger a new cycle of inflation and interest rate hikes in the US, a scenario policymakers are keen to avoid.

Europe’s stance: Strategic patience and quiet diplomacy

Asked about the European Union’s likely response, Brende said Brussels was adopting a “wait-and-watch” approach for now, preferring dialogue over immediate retaliation. “The US market is crucial for the EU, and the Commission wants to bring digital and services trade into the discussion to show a more balanced picture,” he said.

He also pointed to signals from the Trump camp that may indicate openness to negotiation. “Elon Musk floated the idea of a customs union or zero tariffs between the EU and the US. So there might be some movement,” he said, noting positive reactions from European and US markets.

'Don’t write off Europe yet'

Brende urged against underestimating Europe’s potential, calling it the “comeback kid”. He pointed to Greece and Spain’s economic resurgence post-crisis, and said Europe, still accounting for nearly 20 percent of global GDP, could become an attractive hub for global talent, if it follows through with proposed reforms under former ECB head Mario Draghi’s plan.

“Reducing red tape and making it easier to do business will be key. There’s a global war for talent, and Europe could be a winner,” he said.

Brende added that Europe has diplomatic leverage, citing the EU’s recent long-awaited trade agreement with the Mercosur bloc (Brazil, Argentina, etc.), which now positions the alliance as a joint 30 percent contributor to global GDP. “Europe doesn't have to end up between a rock and a hard place. It can work with India, China, Latin America, and the US,” he said.