Though recent actions by the US and China could be seen as heralding a trade war, nations still have the opportunity to resolve their differences through multilateral discussions, the International Monetary Fund’s chief economist said here on Tuesday. “The first shots in a potential trade war have now been fired,” Efe quoted Maurice Obstfeld as saying as the IMF presented the latest edition of its World Economic Outlook.
“There’s still room for countries, I think, to engage in a more multilateral set of discussions to take advantage of the set of dispute resolution mechanisms in place to avoid any intensification,” he added. The report, presented ahead of the 2018 Spring Meetings of the IMF and World Bank Group, estimates a global economic growth of 3.9 percent for this year and for 2019.
However, the IMF expressed its concerns regarding the possible effects of trade restrictions and counter-restrictions, which threaten to “undermine confidence and derail growth prematurely,” Obstfeld said. After being sworn in as US President, Donald Trump has disrupted some of the foundations of the current world economic order, of which the IMF is one of its main standard bearers, by questioning the benefits of free trade and pointing out its negative effects on many US workers.
Last month, Trump turned his harsh rhetoric into action, imposing a 25 per cent tariff on steel imports and a 10 percent tariff on aluminum. Although he later exempted various countries and regions, including the European Union, Canada, Australia, Mexico and Argentina, the tariffs have set the stage for a possible succession of trade restrictions and counter-restrictions.
Soon after imposing tariffs on steel and aluminum, Trump ordered new tariffs on hundreds of Chinese products, while Beijing responded with its own set of levies on the US products.