“If you model tariffs on a large portion of the goods that are traded, you take the entire volume of goods traded between the U.S. and China, in particular, $500Bn, you apply tariffs to that. You are at risk, you are putting at risk .8 percent of global growth. If on the other hand, you eliminate only 25 percent of the barriers on the trading of services, you obtain the same result except positive. So minus .8, if you put heavy tariffs on the goods, plus .8 if you eliminate 25 percent of the tariffs on services,” said IMF Managing Director Christine Lagarde after the meeting of the International Monetary and Financial Committee (IMFC) held last Saturday.
The International Monetary Fund’s policymaking body met in Washington on Saturday and issued a communique calling for cooperation to secure the recovery, promote inclusion, and expand opportunities. Trade was a key focus.
IMF is warning against the pernicious effects of a trade war between China and the US since the very begining of the trade tensions.
Specifically the same Christine Lagarde said on her speech before the U.S. Chamber of Commerce in Washington D.C. on 2nd April 2019: “Specifically, we have looked at what might happen if tariffs on all goods traded between the US and China went up by 25 percentage points. That alone would reduce annual GDP by up to 0.6% in the US and by up to 1.5% in China.”…”Nobody wins a trade war, you might have heard me say that as well! That is why we need to work together to reduce trade barriers and modernize the global trade system, so that we all win.”
Last 2nd April, the IMF published its World Economic Outlook (WEO). The report says that global growth is expected to slow from 3.6% in 2018 to 3.3%in 2019, before returning to 3.6% in 2020. Among the factors slowing the global growth, trade tensions between the USA and China and Brexit were quoted as main risks.
Image over the headline.- Christine Lagarde at the press conference held after the meeting of the International Monetary and Financial Committee (IMFC) held last Saturday. IMF Photograph/Cliff Owen
Related eastwind links:
Watch the press conference offered by Christine Lagarde at the World Bank-IMF Spring Meeting
Related external links:
To download WEO 2019, click here
Watch the WEO press conference
