The International Monetary Fund’s Managing Director Christine Lagarde said on Wednesday that nobody wins in a trade war and that the macroeconomic impact of U.S. tariffs on imports would be serious if other countries respond with tariffs of their own.
When the other countries feel that the trade is affected, there is a high possibility of retaliation from them by creating new tariffs on the products of the US that are imported.
“The macroeconomic impact would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany in particular,” Lagarde said on French radio RTL.
Trump Tariffs Plan
On Tuesday, U.S. President Donald Trump reiterated his plan to slap big tariffs on imports of steel and aluminum, warning the European Union it would get hit with a “big tax” for not treating the United States well when it comes to trade.
“In a so-called trade war, driven by reciprocal increases of import tariffs, nobody wins, one generally finds losers on both sides,” Lagarde said, adding that she hoped that Trump would not implement the tariffs threat.
“We recommend an agreement between the different parties, and talks, talks,” she said.
Trump Ready For The Consequences
However, she indicated that Trump might have a case for threatening to slap tariffs on some imports, saying there were a few good reasons to protest against the current situation.
“There are some countries in the world that do not necessarily respect the World Trade Organisation agreements, and which impose technology transfers. China is a case in point but it is not the only country with such practices,” she said.
The US president meanwhile stated that the nation is ready for a potential trade war with the countries with which there is nearly $800 billion of trade deficit, should they retaliate against his decision of tariffs.
“We lose USD 800 billion a year in trade. I think I was elected, at least partially on this issue. I’ve been saying it for 25 years; our country’s been taken advantage of by everybody, almost everybody. We cannot let that happen any longer — not for our companies and not, most importantly, for our workers. So we’re not going to let it happen,” he asserted.