Trade wars boost inflation and disrupt economic ties, the global lender said
International Monetary Fund (IMF) Managing Director Kristalina Georgieva has warned that tariffs championed by US President Donald Trump could increase inflation globally.
Speaking at a press briefing on Thursday, Georgieva lamented that “the largest economy in the world has chosen to use tariffs as an instrument in relations with partners.”
The IMF chief urged nations to continue adhering to “trade on the most favored nation rule,” adding that imposing tariffs “does not work well for you” unless a country has a “very large” and “relatively closed” economy. She cautioned that states introducing such measures would see prices rise domestically.
“If there is a flare-up of trade tensions, that would of course have a negative impact,” Georgieva said, noting that the US and China are engaged in a trade war. “This is why we are saying: please, do not – do not do that. It is not a healthy action,” she added.
Trump has introduced what he calls “reciprocal” duties on dozens of nations he accuses of “ripping off” America through unfair trade practices. He recently imposed 50% tariffs on most imports from India and Brazil and has threatened China with an additional 100% duty starting next month.
The US president has argued that some tariffs are meant to pressure India to halt its purchases of Russian oil and support sanctions on Moscow. India’s Foreign Ministry, however, denied on Thursday Trump’s claim that Prime Minister Narendra Modi had assured him the country would stop buying Russian oil.
