G20 warns that trade tensions are hindering worldwide growth

Elias Hubbard
July 23, 2018

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.

IMF Director Christine Lagarde said on Saturday that the American tariffs could reduce global GDP by as much as 0.5 percent.

U.S. President Donald Trump takes part in a welcoming ceremony with China's President Xi Jinping in Beijing on November 9, 2017. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.

Argentina's Economy Minister Nicolas Dujovne hinted that the G20 could not afford a rupture over trade disputes which he said should be resolved directly between governments or through the World Trade Organization.

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.

Mnuchin also dismissed the economic impact of the raft of tariff hikes and retaliatory duties, saying so far they have only affected the USA on a "micro" scale. "We are working to strengthen the contribution of trade to our economies".

Mnuchin said that while there were some "micro" effects, such as retaliation against USA -produced soybeans, lobsters and bourbon, he did not believe that tariffs would keep the United States from achieving sustained 3 percent growth this year.

European Union finance chief Pierre Moscovici hit out at Trump's protectionist policies, but said cool heads are needed to resolve the dispute.

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As well, steep tariffs on steel and aluminum imports from Canada, the European Union and Mexico have resulted in a wave of retaliatory tariffs in response.

"We believe that targeting us is certainly inappropriate. and that we must act with the United States as allies - not foes but allies", added Moscovici.

Mnuchin insisted the U.S. wants to "resolve the trade issues with the EU" and the complaint often is more about "non-tariff barriers" than tariffs.

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.

The question now is whether the trade war he has cultivated will escalate to include new tariffs on auto imports.

Lagarde said that taking into account "current announced and in process measures" an International Monetary Fund simulation "indicates" that in a worst case scenario a half point would be cut from global GDP, amounting to some $430 billion. The U.S. and China have slapped tariffs on $34 billion USA worth of each other's goods so far.

"We want our companies to have the same access to their markets that they have to us", Mnuchin said about the Asian giant. It was not alone at the complaint to the organization, as Trump's levies also targeted Canada and China, who has always been protesting what it called U.S. unilateralism referring to United States protectionist policies.

Other reports by Click Lancashire

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