Global growth could be significantly impacted by the recent spate of trade tariffs, warned the International Monetary Fund (IMF) targeted at the world economic leaders. The warning comes barely after a few days of United States President Donald Trump issuing threats of significantly increasing the trade spat with China.
A report detailing the impacts of the restrictions already announced on global trade would be presented to the G20 finance ministers and central bank governors who are meeting ion the Argentine capital of Buenos Aires, said the IMF Managing Director Christine Lagarde.
“It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures…is in the range of 0.5 pct of GDP on a global basis,” Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.
Lagarde’s warning was preceded by a comment by the top U.S. economic official, Treasury Minister Steven Mnuchin who told reporters in Buenos Aire that there was the world’s largest economy did not yet face any “macroeconomic” effect of the trade tariffs.
For the US, the trade deficit with China has always been a concern and that has now come into the open with the two largest economies of the world imposing trade tariffs on each other’s good worth $34 billion each till now.
There has also been a dramatic increase in rhetoric on both sides just before the meeting in Buenos Aires. Trump said in an interview on Friday last week that he was not averse to considering imposition of tariffs on all of the $500 billion of Chinese imports into the US.
The US attempted to garner support from within the G7 allies present at the G20 summit to raise a joint voice and greater aggressive action against Chine. However. the allies did not seem to be every enthusiastic of the US idea primarily because of the imposition of import tariff on steel and aluminum by the US even on the allies such as the European Union and Canada. The tariffs have drawn retaliatory measures from the alias against US goods.
During the last G20 finance meeting in Buenos Aires that took place in March, no concrete policy on trade could be arrived at by the ministers except for an agreement for “further dialogue.”
There is apparently no macroeconomic impact of the U.S. tariffs on steel, aluminum and Chinese goods as well as the retaliatory tariffs by the trading partners, US Treasury Secretary, Steve Mnuchin told reporters on Saturday.
He however said that he had noticed microeconomic effects on individual businesses and added that situation was being closely monitored by the administration and was seeking out ways to aid the US farmers who have been affected by retaliatory tariffs.
(Adapted from TheGlobeandMail.com)