Tariffs Will Hurt Economy, IMF Warns, as Trump Threatens More

Marco Green
July 22, 2018

"We are all, particularly us European countries, anxious about this trade war that was launched a few weeks ago", Le Maire told AFP from Buenos Aires, where the two-day Group of 20 summit amongst finance ministers got underway.

But those efforts will be complicated by frustration over US steel and aluminum import tariffs on the European Union and Canada. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.

U.S. Treasury Minister Steven Mnuchin has no plans for a bilateral meeting with his Chinese counterpart in Buenos Aires, a U.S official said this week.

The finance ministers of G20 countries gathered in Buenos Aires for talks on Saturday and Sunday that are set to see the Trump administration's protectionist policies and implementation of tariffs on billions of dollars worth of goods in recent months be a major source of frustration.

French Finance Minister Bruno Le Maire said on Saturday the European Union could not consider negotiating a free trade agreement with the United States without Washington first withdrawing its tariffs on steel and aluminium.

Le Maire said Europe as a whole was anxious about being dragged into a global trade war that would leave everyone as "losers" after US President Donald Trump initiated retaliatory measures by hitting China and traditional allies the EU, Canada and Mexico with trade tariffs.

International Monetary Fund managing director Christine Lagarde said she will give a report on how the global economy has been impacted by the trade tariffs to G20 finance ministers and central bank governors at a meeting in Buenos Aires.

Global growth also may have peaked at 3.9 percent for 2018 and 2019, and downside risks have risen due to the tariff spat, the International Monetary Fund said.

Lagarde's presentation came shortly after Mnuchin said there was no "macro" effect yet on the USA economy.

But he said there have been microeconomic effects on individual businesses, adding that the administration was closely monitoring these and looking at ways to help USA farmers hurt by retaliatory tariffs.

Mnuchin today told reporters he had not seen a macroeconomic impact on the USA from its tariffs on steel, aluminium and Chinese goods.

The U.S. dollar fell the most in three weeks on Friday against a basket of six major currencies.DXY after Trump complained again about the greenback's strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest in a year.

At the close of the last G20 meeting in Argentina in March, the financial leaders representing 75 percent of world trade and 85 percent of gross domestic product released a joint statement that rejected protectionism and urged "further dialogue", to little concrete effect.

German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low. The U.S. and China have slapped tariffs on $34 billion United States worth of each other's goods so far.

"I don't expect tangible progress to be made at this meeting", Scholz told reporters on the plane to Buenos Aires.

Rising trade tensions have led to concerns within the Japanese government over currency volatility, said a senior Japanese G20 official, who declined to be named. "I think restraint will eventually take hold".

Other reports by Click Lancashire

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