The International Monetary Fund's (IMF) Managing Director Christine Lagarde has warned a global trade war would create a lose-lose situation for everyone, amid an escalating war of words between the U.S. and several of its trading partners.
Speaking to French radio station RTL on Wednesday, Lagarde said: "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."
Last week, President Donald Trump condemned the U.S. trade deficit with other countries and proposed plans to impose hefty tariffs on steel and aluminum imports.
That prompted a firm global response from Washington D.C.'s trading partners, as well as criticism from the World Trade Organization (WTO).
'Trade wars are good'
Trump has since reaffirmed his plans to slap tariffs on steel and aluminum imports, warning the European Union (EU) it could soon face a "big tax" for failing to treat the U.S. properly when it comes to trade. He later insisted trade wars are "good."
The IMF's Lagarde said she hoped Trump would not implement his threat to impose tariffs.
"In a so-called trade war, driven by reciprocal increases of import tariffs, nobody wins, one generally finds losers on both sides," she said.
Nonetheless, Lagarde also conceded the U.S. president might have a case when it comes to the trade situation of the world's largest economy.
"There are some countries in the world that do not necessarily respect the World Trade Organization's agreements, and which impose technology transfers. China is a case in point, but it is not the only country with such practices," Lagarde said while speaking to RTL on Wednesday.