The International Monetary Fund (IMF) warned that the Trump administration’s new import tariffs pose a threat to the world’s trading system.
A trade war would result in “losers on both sides” and could have “serious” impact, said IMF Director Christine Lagarde.
The US recently imposed steel and alumninium tariffs on the European Union, Canada, Mexico and China. The tariffs have already prompted retaliatory measures.
“These measures … 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 said.
“Let us not understate the macroeconomic impact,” Ms Lagarde said. “It would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany.”
The warning comes as the US is about to impose tariffs on $50 billion worth of Chinese products. A list of the Chinese products that will have new tariffs on them is expected to be published by 15 June.
The IMF continues to forecast US economic growth of 2.9% in 2018. However, the organisation expects growth to slow to 2.7% in 2019 and 1.9% in 2020.
The US Treasury Department said in a statement that tax reform and de-regulation will help drive “more sustainable economic growth”.
“While we appreciate the IMF’s work on their report and share similar short term forecasts on US economic growth, we differ significantly on the medium and long term projections,” said U.S. Treasury Secretary Steven Mnuchin.