IMF warns America of consequences of protectionist trade policies
IMF also said that while US economic growth is expected to be strong this year.
New tariffs imposed by US President Donald Trump threaten to undermine the global trading system, provoke retaliatory responses from other countries and hurt the US economy, the International Monetary Fund warned on Thursday.
In a review of US economic policy, the IMF also said that while US economic growth is expected to be strong this year and next, recent tax and spending actions could pose greater risks starting in 2020.
Trump angered key US allies by pursuing protectionist trade policies, including tariffs on imports of steel and aluminum from the European Union, Canada, and Mexico.
"These measures ... are likely to push the world away from an open, fair and rule-based trading system with adverse effects for both the US economy and business partners," the IMF said in its report.
A cycle of retaliatory trade responses is likely to discourage investment at the national and international levels, disrupt global and regional supply chains and undermine a system that supports growth and job creation in the United States, the IMF said.
"The United States and its trade partners should work ... to reduce trade barriers and settle trade and investment differences without resorting to tariffs and other barriers," he said.
On the other hand, the IMF kept its forecast in April that the US economy will grow by 2.9 percent in 2018 and 2.7 percent in 2019.
Consistent with the US central bank's forecast, the IMF predicted that growth in the US would slow significantly in 2020, expecting the annual growth rate to fall to 1.9 percent