Protectionism hurts everyone, especially poorer consumers, and even protected industries, which become “less dynamic than their foreign competitors”
That was Christine Lagarde’s message on import restrictions, speaking in Hong Kong earlier today, amid escalating US-China tensions.
The IMF managing director described how policy makers must respond to uncertainties, which threaten chances of higher living standards. Doing this now would give governments the best chance to sustain the current global upswing, which saw the IMF predict 3.9% growth for 2018 and 2019.
Lagarde listed other concerns like rising financial and fiscal risks and more uncertain geopolitics. She said though, that the first priority is to avoid trade wars, which lead to more expensive products, limited choices and stop trade from boosting productivity and spreading new technologies.
This comes shortly after Trump announced plans to put 25% tariffs on foreign steel and 10% on aluminium, and has threatened tariffs on Chinese imports, accusing them of unfair trade.
Lagarde called governments to address unfair trade, asking each country to look at its own practices but stressed the importance of resolving disputes “without using exceptional measures” pointing out that challenges are more manageable when countries work together.
Her other priorities were guarding against fiscal and financial risk by gradually reducing debt, and fostering growth by enhancing and growing service sectors and increasing public sector efficiency through better digitalisation.