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IMF warns Asia retaliatory tariffs could undermine growth
Srinivasan's remarks come amid concerns over US President-elect Donald Trump's plan to impose a 60 percent tariff on Chinese goods and at least a 10 percent levy on all other imports.
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A man walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, US, May 10, 2018. (Reuters/YURI GRIPAS)
T
he International Monetary Fund (IMF) warned on Tuesday that "tit-for-tat" tariffs could undermine Asia's economic prospects, raise costs and disrupt supply chains even as it expects the region to remain a key engine of growth for the global economy.
"The tit-for-tat retaliatory tariffs threaten to disrupt growth prospects across the region, leading to longer and less efficient supply chains," IMF Asia-Pacific Director Krishna Srinivasan said at a forum in Cebu on systemic risk.
Srinivasan's remarks come amid concerns over US President-elect Donald Trump's plan to impose a 60 percent tariff on Chinese goods and at least a 10 percent levy on all other imports.
Tariffs could impede global trade, hamper growth in exporting nations, and potentially raise inflation in the United States, forcing the US Federal Reserve to tighten monetary policy, despite a lackluster outlook for global growth.
In October, the European Union also decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3 percent, prompting retaliation from Beijing.
The IMF's latest World Economic Outlook forecasts global economic growth at 3.2 percent for both 2024 and 2025, weaker than its more optimistic projections for Asia, which stand at 4.6 percent for this year and 4.4 percent for next year.
Asia is "witnessing a period of important transition", creating greater uncertainty, including the "acute risk" of escalating trade tensions across major trading partners, Srinivasan said.
He added that uncertainty surrounding monetary policy in advanced economies and related market expectations could affect monetary decisions in Asia, influencing global capital flows, exchange rates, and other financial markets.
