Trade tensions could spark a 'global economic crisis,' says former trade minister

  • George Yeo, a former Singapore foreign and trade minister, says there's potential for a "global economic crisis" arising from the U.S.-China trade war.
  • Yeo, who is now chairman of Kerry Logistics Network, says the company has profited in the short run as companies divert trade and investment to avoid tariffs.
  • He says that the best chance to resolve the trade war is in direct talks between U.S. President Donald Trump and Chinese President Xi Jinping.

The escalating trade war between the U.S. and China could lead to a "global economic crisis," according to George Yeo, a former Singapore foreign and trade minister.

Yeo, currently chairman of Hong Kong-based Kerry Logistics Network, said his company has actually benefited in the short term from the tariff conflict between the world's two largest economies.

Businesses are speeding up shipments and diverting trade and investment to avoid the impact of tariffs, providing a boon for his company's earnings.

"But this is temporary," he told CNBC on Friday.

"It's not good for us in the near term if it leads to a global economic crisis, which may well happen," Yeo said.

"I mean we've just had Trump threatening to leave the WTO if it doesn't change in the U.S. favor," he added. "So all this is causing a lot of anxiety all around."

U.S. President Donald Trump, in an interview published on Thursday by Bloomberg, threatened to withdraw the U.S. from the World Trade Organization, his latest verbal assault on the global trading system.

"If they don't shape up, I would withdraw from the WTO," Trump said in the interview, criticizing the Geneva-based body's treatment of the U.S.

Bloomberg also reported that Trump said to his aides that he supports going ahead with the imposition of proposed tariffs on an additional $200 billion in Chinese goods. The White House declined to comment on the report.

U.S. President Donald Trump, left, and Xi Jinping, China's president, shake hands during a news conference at the Great Hall of the People in Beijing, China, on Thursday, Nov. 9, 2017.
Qilai Shen | Bloomberg | Getty Images
U.S. President Donald Trump, left, and Xi Jinping, China's president, shake hands during a news conference at the Great Hall of the People in Beijing, China, on Thursday, Nov. 9, 2017.

Yeo added that, while he doesn't see a worldwide crisis as a "probability," he stressed that people in business are increasingly on edge about the global economy, citing Argentina's skyrocketing interest rates as an example of the nervousness.

"These things can spread very quickly," he said.

He also said that uncertainty regarding the U.S.-China trade war is forcing businesses to make choices, such as where to put a new factory.

"Do you put it in China or do you put it in Southeast Asia," he said, adding that such considerations apply to both Chinese and non-Chinese multinationals.

Yeo said he believes China is willing to be accommodating to the U.S. to resolve the trade dispute, but that a deal will ultimately have to be hashed out by Trump and Chinese President Xi Jinping.

"Trump has repeatedly said, 'I'm the only one who matters,'" Yeo said. "And I think he's shown by action that that's absolutely true.

"Therefore, China has got to deal with him, in the end, directly," he added.