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Trump's tariffs pose risk to global trade: IMF

Friday, 15 June 2018 1:19 AM [ Last Update: Friday, 15 June 2018 1:22 AM ]

The International Monetary Fund (IMF) managing director, Christine Lagarde talks about the IMF's preliminary findings of its annual review of the US economy as Director of the Western Hemisphere, Alejandro Werner (C), and Deputy Division Chief of the Western Hemisphere, Daniel Leigh (L) look on during a news conference in Washington DC on June 14, 2018. (AFP photo)

The International Monetary Fund (IMF) says US President Donald Trump's new import tariffs threaten to undermine the global trading system.

"Let us not understate the macroeconomic impact," IMF Director Christine Lagarde told reporters in Washington, adding the tariffs will have a larger economic toll if they prompt retaliation from trading partners like Canada and Germany.

If there is tit-for-tat retaliation from US trading partners there will be "losers on both sides," Lagarde said.

She added that such an outcome would have a "serious" economic impact on the US and global economies.

The IMF, the Washington-based international lender, also issued a review of US economic policy in which it did not paint a rosy picture of America's economic growth.

The report said US economic growth is expected to be strong this year and next, but recent tax and spending measures could cause greater risks from 2020 onwards.

Trump’s protectionist trade policies, including the imposition of steel and aluminum tariffs on the European Union, Canada and Mexico “are likely to move the globe further away from an open, fair and rules-based trade system, with adverse effects for both the U.S. economy and for trading partners," the IMF report noted.

In a sharp rebuke from one of America’s closest allies, Canada's Prime Minister Justin Trudeau has said that the imposition of US tariffs on metal imports is an insult to their long standing security partnership.

A similar national security argument was presented when the president imposed steep tariffs on aluminum and steel imports from China, Russia, Germany, Canada and some other countries in March.

Trump has castigated Canada in ac recent tweet, saying it had treated US farmers “very poorly for a very long period of time.”

The German government has also called on the United States not to take a “wrong path” by putting tariffs on steel and aluminum imports, warning that a transatlantic trade war could harm both Europe and the US.

The EU has taken the United States to the World Trade Organization to challenge the legality of the new tariffs and the Trump administration’s national-security justification. Brussels has also lodged an eight-page list at the international trade body of goods it would hit with retaliatory measures.

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