The World Trade Organisation (WTO) on Wednesday estimated the U.S.-China trade tensions could cut the trade of goods between the two economies by as much as 80%.

"This tit-for-tat approach between the world’s two largest economies, which together account for roughly 3% of global trade, carries wider implications that could severely damage the global economic outlook," it said.

Dividing the global economy into two blocs in this way could lead to a long-term reduction in global real GDP by nearly 7%, the statement added.

Its preliminary estimate was issued around the time U.S. President Donald Trump further raised tariffs on imports from China but paused some others for 90 days.