The Trump administration's new tariffs against imports threaten to undermine the rules-based global trading system and damage the global economy, the International Monetary Fund (IMF) said Thursday.
Those protectionist measures "are likely to move the globe further away from an open, fair and rules-based trade system, with adverse effects for both the US economy and for trading partners," the IMF said in a report after concluding the Article IV consultation with US authorities, an annual check-up of economic policies between the IMF and its member countries.
The IMF said the tariffs imposed or proposed by the Trump administration also risk "catalyzing a cycle of retaliatory responses from others, creating important uncertainties that are likely to discourage investment at home and abroad."
Meanwhile, it could interrupt global supply chains and damage a range of countries as well as the operations of US multinational companies, said the Washington-based international lender.
The IMF's warnings came after the Trump administration unilaterally imposed high tariffs on steel and aluminum imports on the grounds of national security, which had drawn strong opposition from the domestic business community and major US trading partners.
"Unilateral trade actions can be disruptive and may even prove counterproductive to the functioning of the global economy and trading system," IMF's Managing Director Christine Lagarde said Thursday at a press conference.
"As I have said before, in a so-called trade war, driven by reciprocal increases of import tariffs, nobody wins," she said. "Let us not understate the macroeconomic impact."
The IMF chief urged the Trump administration to work constructively with other trading partners to address trade and investment disputes.
"We, therefore, encourage the US to work constructively with its trading partners to resolve trade and investment disagreements without resorting to the imposition of tariff and non-tariff barriers," she said.
