IMF chief warns trade war will snuff out global growth

PARIS: The head of the International Monetary Fund (IMF) warned today that a trade war US President Donald Trump apparently intends to provoke with tariffs on steel and aluminium would snuff out global growth.
“If international trade is called into question by these types of measures, it will be a transmission channel for a drop in growth, a drop in trade and it will be fearsome,” Christine Lagarde said on RTL radio.
“In a trade war that will be fed by reciprocal increases of customs tariffs, no one wins,” she added.
Trump boasted last week on Twitter that trade wars are “easy to win” after his initial announcement of 10% tariffs on imports of aluminium and a 25% levy on steel brought into the US provoked a global outcry.
US allies have threatened to retaliate by slapping tariffs on US goods entering their markets. The EU is expected to detail its retaliatory measures today.
“We are anxious that these are not triggered, we are urging the sides to reach agreements, hold negotiations, consultations,” said Lagarde.
The IMF chief said that to a certain extent she understood the US president’s frustration with the global trade system.
Trump “has good reasons to protest against the current situation. There are countries that don’t always respect World Trade Organisation (WTO) agreements, which have technology transfer requirements, one thinks naturally of China, but China isn’t the only country to have such practices,” said Lagarde.
The EU is to set out plans to strike back against Trump’s threatened steel and aluminium tariffs, with flagship US products such as jeans, motorbikes and whiskey in the crosshairs.
No official decision by the EU is expected as Trump has yet to sign into effect his plan to set tariffs for what he calls unfair competition for US industry, but French President Emmanuel Macron has demanded Europe be ready to act swiftly if he does.
European Commission chief Jean-Claude Juncker on Friday threatened to hit big-name US brands such as Harley Davidson motorbikes, Levi’s jeans and bourbon whiskey with import duties.
This prompted Trump to fire back a threat to tax cars from the EU, further fuelling fears of a full-on transatlantic trade war erupting.
“We are looking at possibilities to retaliate, meaning that we will also put taxes or tariffs on US imports to the European Union,” EU trade commissioner Cecilia Malmstrom told the BBC on Monday.
Despite Juncker’s headline-grabbing threat to iconic US brands, the hitlist the EU is working on does not mention specific businesses.
Malmstrom said the EU was also looking at “safeguard” measures to protect its industry – restricting the bloc’s imports of steel and aluminium to stop foreign supplies flooding the European market, which is allowed under WTO rules.
Juncker, who today met Lakshmi Mittal, the boss of the world’s top steelmaker ArcelorMittal, said last week the EU would “react firmly” to protect European industry. – AFP