The International Monetary Fund (IMF) warned world economic leaders on Saturday that trade tariffs will significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in his trade dispute with China.
IMF Managing Director Christine Lagarde presented the G20 finance ministers and central bank governors at a meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade. In the report, the IMF said global growth may peak at 3.9% in 2018 and 2019, while downside risks have increased due to the growing trade conflict.
Her warning came shortly after the top U.S. economic official, Treasury Secretary Steven Mnuchin, told reporters in the Argentine capital there was no "macroeconomic" effect yet on the U.S., the world's largest economy.
Long-simmering trade tensions have burst into the open in recent months, with the United States and China slapping tariffs on $34 billion worth of each other's goods. The weekend meeting in Buenos Aires came amid a dramatic escalation in rhetoric on both sides. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.
Secretary Mnuchin will try to rally G7 allies over the weekend to join the United States in more aggressive action against China, but they may be reluctant to co-operate because of U.S. tariffs imposed on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures. The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to more dialogue.
