Rising import tariffs and other steps taken by Washington are "undermining the global trading system," increasing restrictions on trade in goods and services, and catalyzing a cycle of retaliatory trade responses, the International Monetary Fund (IMF) said on Thursday.
"Tariff measures are likely to be ineffective at containing bilateral trade deficits and will be damaging to the U.S. and to global macroeconomic outturns," the IMF said in a statement after concluding its annual Article IV consultation to review the U.S. economy.
"Rather than expanding tariff and non-tariff barriers, the U.S. and its trading partners should work constructively to better address distortions in the trading system," the IMF said, adding that it's "especially important" that the U.S.-China trade tensions are "quickly resolved" through a comprehensive agreement that strengthens the international system.
"The U.S. would gain by working with international partners to strengthen the rules-based, multilateral trading system," said the Washington-based international lender.
Christine Lagarde, managing director of the IMF, said Thursday at a press conference that the trade tensions between the United States and its trading partners "represent a threat to the global outlook" and "create important negative spillovers" to other countries.
"For the global economy to function well, it needs to be able to rely on a more open, more stable, and more transparent, rules-based international trade system," Lagarde said. "As we mentioned before, nobody wins a trade war."
