World Trade Organization's director-general Ngozi Okonjo-Iweala urged countries two avoid a tariff war that could cause a "catastrophic" chain reaction.
President Donald Trump has threatened 25% tariffs targeted at Canada and Mexico with another 10% tariff for China.
"If we have tit-for-tat retaliation, whether it's 25% tariff (or) 60% and we go to where we were in the 1930s we're going to see double-digit global GDP losses," Okonjo-Iweala said at the World Economic Forum in Davos, reported Reuters.
"That's catastrophic," she said. "Everyone will pay."
The 1930s Smooth-Hawley Act triggered retaliatory trade restrictions and led to gross domestic product losses.
Okonjo-Iweala urged for countries to "keep calm" and use WTO mechanisms to resolve disputes, reported Reuters.
Okonjo-Iweala said she was "encouraged" over Trump's decision to delay tariffs on Canada and Mexico.
Financial experts fear widespread tariffs could disrupt international trade, cause a trade war and exacerbate inflation with American consumers potentially bearing the brunt of higher costs on goods.
Later in the day, President Trump spoke to the gathering remotely. He warned companies to move production to the United States or face tariffs.
