IMF warned that the United States would be very vulnerable in a trade war

The Fund has already warned for months of the systemic risks of a widespread trade war, after the first steps taken by the United States and China.

The International Monetary Fund (IMF) warned Wednesday that the United States would remain in a very vulnerable position if its trade protectionism unleashed widespread retaliatory measures.

"Although all countries will be in conflict, the US economy is particularly vulnerable because much of its global trade will be subject to reciprocal measures, and GDP will not be the only cost," said Christine Lagarde on her blog. (Interested in That's How the World Trade War Goes )

The IMF has already warned for months of the systemic risks of a war widespread trade, after the first steps given by The United States and China, the world's two largest economies

In its review of global economic outlook, released Monday, the entity has warned that "the risk that current trade tensions will intensify and has a negative impact on confidence and investment represent the biggest threat to global growth in the short term. "

The government of Donald Trump has already imposed heavy duties on steel and aluminum imports and has also adopted tariffs

Traditional trading partners such as the Canada, Mexico or the European Union in addition to China, have already imposed rights on US products in the first chapter. About a stage of adoption retaliatory measures. (See also Trump's trade war is "a serious risk" for the global economy, according to the OECD )

– Issues of the "high tide" –

This Wednesday Lagarde He noted that "the tensions are already making their mark, but the extent of damage will depend on what the makers will do next."

Unfortunately , he noted, "rhetoric became reality."

Lagarde indi that the IMF had conducted simulations to try to measure the damage caused by a trade war, and pointed out that the import tariffs announced this year by several countries would result in a 0.1 point reduction in world production. by 2020

"But if investor confidence is affected by these tariffs, our simulation shows that global GDP could be reduced by half a percentage point"; The IMF estimates that growth in the global economy is expected to be 3.9% this year, but Lagarde pointed out that it could be a "large number of tides ".

This global growth "has already begun to slow down in the Euro Zone in Japan and the United Kingdom," said Lagarde, adding that the US economy itself should " moderate "in the medium term. 19659005] To complete the scenario, growth also slowed in emerging economies "partly because of rising oil prices and monetary pressures."

– Possible Scenarios – [19659005] In general, IMF technicians have developed four possible scenarios for measuring the effects of this situation at the global level.

The first of these scenarios considers the tariffs already adopted by USA for imports. steel (25%) and aluminum (10%), as well as a 25% tariff on imports of Chinese products over $ 50 billion, as well as announced measures retaliation.

In the second scenario, the IMF adds to this equation, the additional 10% rate that the United States intends to adopt for $ 200 billion in Chinese imports this year.

For the third possible scenario, the technicians incorporate tariffs of 25% to the imports of automobiles, finally, the retaliatory measures that would be adopted by the affected countries.

Finally, the fourth adds elements such as the fracture of trust and a decrease in investment in the manufacturing sector.

According to the IMF the first three US scenarios could be subject to retaliation while the rest of the countries would have the alternative of reorganizing their commercial flow while avoiding the client American. [19659] 005] But in the last scenario, the Fund warns that the US GDP would suffer an impact of -0.8% in the first year alone, in a situation that for Asia would represent a drop of -0.7%, to -0.6% in Latin America and Japan.