IMF Managing Director Christine Lagarde has urged countries to avoid being sucked into a global trade war in the wake of U.S. tariffs on steel and aluminium, disagreeing with President Donald Trump’s views that such conflicts are easy to win.
In a blog post released Thursday, Lagarde She said: “Policy makers need to work constructively together to reduce trade barriers and resolve trade disagreements” without resorting to such tactics.
“They should ensure that the recently announced U.S. import tariffs do not lead to a wider escalation of protectionist measures. Economic history clearly shows that trade wars not only hurt global growth, but they are also unwinnable.”
The IMF Boss issued the warning as finance ministers and central bank governors from the Group of 20 prepare to meet in Buenos Aires from March 19-20.
Trump’s decision to slap tariffs on steel and aluminium has provoked threats of retaliation from China to Europe, raising questions about the broader threat to the global recovery.
A full-blown trade war could shave $470 billion from global economic output, according to an analysis by Bloomberg Economics. That’s under a scenario where the U.S. implements a 10 percent levy on imports and the rest of the world reacts.
