Paris (AFP) – The head of the International Monetary Fund warned Wednesday 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 percent tariffs on imports of aluminium and a 25 percent levy on steel brought into the United States 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 on Wednesday.
“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 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 Trump administration has made the World Trade Organization (WTO) a preferred target of its “America First” policy, threatening to pull the US out of the trade body it says is hampering its ability to compete.