IMF warning on tariffs
Protectionist policies a recipe for disaster
THE head of the International Monetary Fund has issued a stern warning to governments to avoid undermining global growth with protectionist trade policies.
And Reserve Bank governor Philip Lowe has warned that a rise in “trade tensions” would deliver a hit to the Australian economy.
In a thinly-veiled warning to US President Donald Trump, who has locked horns with China on trade, IMF managing director Christine Lagarde yesterday said countries should open trade further by reforming domestic practices rather than putting up new barriers to trade.
It was a mistake, she said, to view trade deficits as a sign of unfair trade practices – as Mr Trump has repeatedly claimed, most notably in the dispute with China.
Mr Trump last month imposed steep tariffs on steel and aluminium imports, and announced pending tariffs on $US50 billion in Chinese goods ($64.6 billion) in retaliation for alleged theft of intellectual property.
Washington and Beijing have since escalated threats of new import duties, raising the real risk of an all-out trade war, although Chinese president Xi Jinping offered an olive branch on Tuesday, committing among other things to stronger protections for intellectual property.
Mr Trump, on Twitter, welcomed Mr Xi’s announcement, thanking him for his “kind words” and saying: “We will make great progress together!”
Speaking in Perth yesterday, Reserve Bank governor Philip Lowe has warned that a rise in “trade tensions” would deliver a hit to the Australian economy Mr Lowe said a “serious escalation of trade tensions would put the health of the global economy at risk and damage the … economy”.
“We also have a lot riding on the Chinese authorities successfully managing the buildup of risk in their financial system,” he said.
Ms Lagarde, previewing the issues to be discussed when world finance ministers and central bankers gather in Washington next week for the IMF and World Bank spring meetings, said governments needed to “to steer clear of protectionism in all its forms”.
“Remember: the multilateral trade system has transformed our world over the past generation,” she said. “It helped reduce by half the proportion of the global population living in extreme poverty.”