Damaged trade relations threaten poorest: IMF's Lagarde
Whistler (Canada) (AFP)
Escalating protectionism among the world's major economic actors threatens to inflict the most pain on the world's poorest, IMF chief Christine Lagarde said Thursday.
The remarks from the head of the International Monetary Fund, an historic promoter of trade liberalization, followed Washington's announcement that it would impose punishing steel and aluminum tariffs affecting its largest suppliers, including Europe and Canada.
"At the end of the day, if trade is massively disrupted, if the level of trust among economic actors is severely damaged, those who will suffer most are the poorest people," Lagarde said at the opening the Group of Seven finance ministers meeting.
"It's going to distort and damage and disrupt supply chains which have been established now for decades."
Lagarde also said 120 of 190 world economies were growing and unemployment was falling to levels recorded before the Great Recession of 2008.
But "colossal" debts and geopolitical risks has created "great uncertainty and instability," she said at the gathering of miniters from the world's top economies.
US Commerce Secretary Wilbur Ross announced Thursday that talks with the EU had failed to reach a satisfactory outcome and the metal tariffs, imposed in March but suspended for most major producers, would take effect at midnight (0400 GMT Friday).
President Donald Trump's decision to proceed with tariffs, while also threatening duties on the auto sector and tens of billions in Chinese goods, has cast a pall over the G7 ministerial hosted by Canada this week, where participants have defended free trade.
Bank of England Governor Mark Carney said opponents of free trade were mistaken to focus on trade imbalances in goods to the exclusion of the services trade -- which he said accounted for most of the developed world's work force.
"If we were to liberalize within the G7 services to the same extend with did goods, those imbalances would be cut in half," he said.
© 2018 AFP