Christine Lagarde talks to Argentina's Foreign Minister Jorge Faurie alongside Argentina's President Mauricio Macri and First Lady Juliana Awada during an official dinner in Buenos Aires.
- The International Monetary Fund (IMF) warned world economic leaders on Saturday that a recent wave of trade tariffs would significantly harm global growth.
IMF Managing Director Christine Lagarde said she would present the G20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade.
"It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures... is in the range of 0.5 per cent of GDP on a global basis," Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.
In the briefing note prepared for G20 ministers, the IMF said global growth may peak at 3.9 per cent in 2018 and 2019, while downside risks have increased due to the growing trade conflict.
Her warning came shortly after the top US economic official, Treasury Secretary Steven Mnuchin, told reporters in the Argentine capital there was no "macro" effect yet on the world's largest economy.
Mnuchin said that - while there were some "micro" effects such as retaliation against US-produced soybeans and lobsters - he did not believe that tariffs would keep the United States from achieving sustained three per cent growth this year.
"I still think from a macro basis we do not see any impact on what's very positive growth," Mnuchin said, adding that he is closely monitoring prices of steel, aluminium, timber and soybeans.
G7 allies
The US dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback's strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest level in a year.
Mnuchin said he would tell G7 allies that the Trump administration is ready to make a trade deal with them and has placed a high priority on completing the North American Free Trade Agreement (Nafta) with Mexico and Canada.
"If Europe believes in free trade, we're ready to sign a free trade agreement," he said, adding that a deal would require the elimination of tariffs, non-tariff barriers and subsidies. "It has to be all three issues."
The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to "further dialogue."
German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.
"I don't expect tangible progress to be made at this meeting," Scholz told reporters on the plane to Buenos Aires.
The US tariffs will cost Germany up to ?20 billion ($23.44 billion) in income this year, according to the head of German think-tank IMK.
Bank of Japan Governor Haruhiko Kuroda said he hoped the debate at the G20 gathering would lead to an easing of retaliatory trade measures. "Trade protectionism benefits no one involved," he said. "I think restraint will eventually take hold."
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