Christine Lagarde, Chief of International Monetary Fund has said that nobody manages to win a trade war, and has warned that other countries could create problems if they wanted. Speaking on Wednesday, she said the U.S. might suffer consequences of the change in economic tariffs, as barriers would be created by other countries in riposte.
U.S. President Donald Trump informed the European Union that if it didn’t provide the U.S. with favorable terms, it would have to face tougher tax laws. He also repeated the plans to impose the increased tariffs on imports of steel and aluminum. Trumps comments have not been well received by businesses as well as U.S. lawmakers and trading partners, who have warned this could result in a back-and-forth battle that will only harm U.S. economy. Trump has responded to these fears by saying that since there was such a large deficit in play, the U.S. could end up coming out on top.
Lagarde has highlighted the countries most likely to be affected by this are Germany and Canada, and that if they were to respond with their own tariffs as a consequence, the macro-economic effect would be quite serious for the world economy. She added that such trade wars regarding import taxes and tariffs usually resulted in both sides losing. She hopes that Trump from refrain implementing these tariffs as no one would win in such a scenario.
Top European Union experts will be meeting on Wednesday, to discuss measures in response to these tariffs. A list of items comprising of U.S. products ranging from bourbon to, even motorbikes made by Harley Davidson, will be part of the discussion, as their will be heavy tariffs imposed if Trump implements his own taxes.
Nathalie Loiseau, French European Affairs Minister said that they weren’t were happy with situation, and advised European countries to stop being naïve in dealing with the aggressive U.S. strategies. They’ll be discussing the trade tariffs threat with the World Trade Organization (WTO), she added.
Meanwhile, Gary Cohn, Trump’s top economic advisor and who’s seen as a representative of the Wall Street in the White House, has said that he would resign after he lost the fight against Trump over these tariffs.
Though Trump has come under heavy criticism for the move, Lagarde believed there was a case for protesting and said that he had a few good reasons to be unhappy with the current trading conditions. Holding China as an example, she pointed out how it had imposed the use of technology for transfers. She said there were other such countries who did not comply with the agreements of the World Trade Organization.
However, she also thought that international trade was imperative for world growth, as any attempt to threaten it would result in loss of competition, growth and innovation. She said world commerce would be at risk of slowing down, as income inequality continued its influence. She also thought that the White House has not given proper thought to retaliation that would follow the imposition of these import tariffs.