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IMF Chief says Trump’s trade policies are putting global economy at risk

“The biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted”

IMF chief Christine Lagarde has been quite vocal about the threats that US President Donald Trump’s economic policies pose to the world economic order.

She’s been criticizing Trump’s brand of protectionism and one-on-one take it or leave it style of diplomacy at nearly every turn here lately.

We observed this at the St. Petersburg International Economic Forum (SPIEF), the G7 Summit in Quebec this past weekend, where she occupied a seat near Mr. Trump himself, and most recently at a Berlin meeting of leaders of world economic organizations, which also featured German Chancellor Angela Merkel.

Between Trump’s global tariffs and regional secondary sanctions threats and escalating trade wars, Trump’s economic policies are placing the world economy at risk and creating an uncertain environment.

Xinhuanet news reports:

BERLIN, June 11 (Xinhua) — International Monetary Fund (IMF) chief Christine Lagarde on Monday attacked the U.S. protectionist trade policies and warned that the cloud over global economy “is getting darker”.

“The biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted, in which relationships have been handled and in which multilateral organizations have been operating,” said Lagarde.

She made the remarks after an annual meeting in Berlin with German Chancellor Angela Merkel and leaders of world economic organizations including the World Bank, the World Trade Organization, the Organization for Economic Cooperation and Development, the International Labour Organization and the African Development Bank.

The IMF expected the global economy to grow by 3.9 percent both in 2018 and 2019, marking a slight pick-up from last year’s 3.8 percent.

But Lagarde added: “the clouds on the horizon that we have signaled about six months ago are getting darker by the day, and I was going to say, by the weekend.”

Following the Group of Seven (G7) summit over the weekend, U.S. President Donald Trump surprisingly withdrew support for a hard-won joint declaration on free trade signed at the meeting in Canada.

Merkel responded to this on Sunday, saying Trump’s last-minute decision was both “sobering” and “disheartening”, and threatening with European Union’s counter measures in an escalating trade war between the two transatlantic powers.

The IMF chief said that challenges to world trade were damaging business confidence and putting global economy at risk.

To ensure effective multilateralism, Lagarde along with other economic leaders, called for global attention, global responsibility and global solutions.

“Effective multilateralism is more important than ever,” they said in a joint statement.

But Trump is serious about his perspective on the issue, as it appears to be singly devised to combat trade deficits in the name of national security.

The G7 had as a key part of its mission the efforts to curb the very sort of protectionist policies that Trump is leading in the Western world, and that effort was something that Trump refused to cooperate in.

Almost every single major economy policy meeting in recent months has had as its aim the preservation of multilateralism and combatting protectionism, all seemingly taking aim at Donald Trump for his tariffs and sanctions threats.

His policies are creating an atmosphere of uncertainty as well as increasing the costs of goods and raw materials the world over through his tariffs which seem to be aimed at creating a better condition for American labour, but which in reality appears to be achieving a quite different outcome: isolating America from its allies, instigating trade wars, increasing costs, and decreasing consumer purchasing power and confidence.

 

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