American trade war could have drastic implications on the global economy and even split the world into two geopolitical trading blocs, according to the director general of the World Trade Organization,

Mr Trump’s decision to consider backing down in his trade war comes as the harm it has caused America’s economy becomes clearer. Trade shipments between China and the US are collapsing and a critical survey of American businesses shows growth in activity slumped to a 16-month low.

President Donald Trump’s unpredictable tariff policy and countermeasures by America’s trading partners will likely deal a heavy blow to economies worldwide, with US prosperity hit particularly hard, the International Monetary Fund warned Tuesday.