Tuesday 21 May 2019

IMF in new trade war alert after Trump spat

Tweets 'not favourable' - Lagarde

Hope: IMF boss Christine Lagarde said they had thought the ‘threat was waning’ and a deal was on the cards
Hope: IMF boss Christine Lagarde said they had thought the ‘threat was waning’ and a deal was on the cards
Donal O'Donovan

Donal O'Donovan

International Monetary Fund (IMF) managing director Christine Lagarde has issued a fresh warning of the risks a threatened trade war poses for the world economy.

US stock index futures fell yesterday as uncertainty of a trade deal being reached between the United States and China kept investors on edge.

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In a surprise tweet on Sunday, US President Donald Trump said higher levies will go into effect this Friday if no deal with China is sealed. His comments triggered a global sell-off in stocks and inflamed fears of a slowdown in global growth.

Ms Lagarde warned the risk of escalation was real. "We thought this threat was waning and relations were improving and we were moving toward an agreement," she said in Paris.

"We hope that is still the case but today rumours, tweets and comments are not very favourable."

Meanwhile, Brussels and Washington are in "daily contact" on trade threats and there is no deterioration the relations, European Commission President Jean-Claude Juncker has insisted.

The head of the EU Commission said President Trump could be trusted on EU-US trade relations, but that the China-US trade conflict needs to be resolved soon to restore investor confidence.

China's Vice Premier Liu He will visit the US this week for trade talks, Beijing said yesterday, playing down a sudden increase in tension after Mr Trump vowed to impose the new tariffs.

US officials said China had backtracked on commitments made during months of negotiations, prompting Mr Trump to say he'll raise tariffs on $200bn worth of Chinese goods to 25pc from 10pc by the end of the week, and would "soon" target remaining Chinese imports with tariffs.

At a news conference in Brussels, Mr Juncker said nothing had changed in transatlantic trade relations since he met Mr Trump in Washington last July.

"White House people and my teams are in nearly daily contact with the administration and so I think that we can trust the president of the US when it comes to trade relations between the US and Europe," he said.

Mr Juncker added that he felt a major part of global economic problems was related to trade tensions between Washington and Beijing.

Meanwhile, Beijing's willingness to continue with the talks in the face of Mr Trump's tweets shows it would remain calm and "focus on the talks rather than engage in public opinion warfare", the widely-read state-run 'Global Times' said in an editorial.

The ruling Communist Party's official People's Daily said China had weathered such threats before, and would keep calm.

Additional reporting Reuters/Bloomberg

Irish Independent

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