IMF's Lagarde: Trade protectionism threatens economic growth

International Monetary Fund chief Christine Lagarde today issued a stern warning to governments to avoid undermining global growth with protectionist trade policies.

In a less than thinly-veiled warning to US President Donald Trump, who has locked horns with China on trade, the head of the IMF said countries should open trade further by reforming their own domestic practices rather than putting up new barriers to trade.

And she said it was a mistake to view trade deficits as a sign of unfair trade practices - as Trump has repeatedly claimed, most notably in the current dispute with China.

Trump last month imposed steep tariffs on steel and aluminum imports, and announced pending tariffs on $50 billion in Chinese goods in retaliation for alleged theft of intellectual property.

Since then Washington and Beijing have escalated threats of new import duties, raising the real risk of an all-out trade war.

Governments "need to steer clear of protectionism in all its forms," Lagarde urged.

"Remember: the multilateral trade system has transformed our world over the past generation. It helped reduce by half the proportion of the global population living in extreme poverty."
In a speech previewing the issues to be discussed when world finance ministers and central bankers gather in Washington next week for the IMF and World Bank Spring meetings, Lagarde said free trade "has created millions of new jobs with higher wages."
"But that system of rules and shared responsibility is now in danger of being torn apart," she warned. "This would be an inexcusable, collective policy failure."
The IMF next week will release its updated World Economic Outlook with forecasts of global growth, but despite the "darker clouds looming," Lagarde said the world economy was seeing an upswing and "we continue to be optimistic."