IMF cautions against adverse implications of trade tension
Christine Lagarde, the managing director of the International Monetary Fund, has warned against adverse implications likely to stem from the economic impact of U.S. import tariffs, saying ‘no one emerges victorious from a trade war’. She warned that the impact could be grave if other countries respond with their own barriers.
Earlier, Donald Trump reiterated his plan to impose big tariffs on steel and aluminum imports, warning the European Union it would get hit with a “big tax” for failing to treat the United States well over trade matters.
“The macro-economic impact would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany in particular,” Lagarde said on French radio RTL.
Trump’s comments have sparked cries of foul play from U.S. trading partners and warnings from U.S. lawmakers and businesses of the potential for a tit-for-tat trade war that could hurt the U.S. economy. Trump has said the United States could win such a war, since it was running such a large trade deficit.
“In a so-called trade war, driven by reciprocal increases of import tariffs, nobody wins, one generally finds losers on both sides,” Lagarde said, adding that she hoped that Trump would not implement the tariffs threat.Trump’s top economic advisor Gary Cohn, seen as a voice for Wall Street in the White House, said he would resign after he lost the fight against Trump over the tariffs.
The EU executive will discuss potential retaliation measures on Wednesday. It has drawn up a list of U.S. products from bourbon to Harley Davidson motorbikes on which to apply tariffs if Trump follows imposes tariffs.
Nathalie Loiseau, French European Affairs minister, said the EU would raise the tariff threat with the WTO.
“We are not happy about this,” Loiseau told Radio Classique. “Europe can no longer afford to be naive and passive faced with this aggressive protectionism,” she said.
