The International Monetary Fund criticized Trump's tariffs plans and warned of their negative impact. The IMF also said by 2020 US economic growth will dip to lower levels than the White House predicts.
Image: Reuters/Y. Gripas
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A report by the International Monetary Fund (IMF) released in Washington on Thursday predicted that US President Donald Trump's new tariff policy and its consequences could be damaging to the global trading system and the US economy.
The IMF assessment comes as the White House is soon to announce its decision on whether to impose 25 percent tariffs on $50 billion (€43 billion) worth of Chinese goods. For its part, China promised on Friday to retaliate immediately should the US place any tariffs the hurt Chinese interests.
The IMF report warned that US-imposed punitive import duties could harm the current world economic recovery by "catalyzing a cycle of retaliatory responses" and interrupting global supply chains.
IMF Director Christine Lagarde urged countries to not understate the larger economic toll that retaliation from trading partners like Canada and Germany could bring.
The direct economic impact of tariffs is hard to calculate, the report concluded, as it is dependent on the size and timing of the tariff responses. But Lagarde insisted any trade conflict could undermine confidence and cause businesses to withhold investments.
She encouraged the United States to "work constructively" with trading partners to resolve trade disputes and refrain from imposing tariffs.
US and EU talk tough on trade
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The report concluded that imposing tariffs was "likely to move the globe further away from an open, fair and rules-based trade system, with adverse effects for both the U.S. economy and for trading partners."
The IMF was also not optimistic about the US economy over the long-term. The report conceded that tax cuts would help fuel growth this year and next, but it also predicted this growth would decrease from 2020 to a level much lower than forecast by the White House.
The IMF projected US growth will hit 2.9 percent this year and 2.7 percent next year. Beyond that, the IMF forecasts growth will slow steadily and drop to 1.4 percent in 2023.
This represents half of the 3 percent growth that the Trump administration said their tax policies will yield.
The Trump administration responded quickly and defended its economic agenda.
The US Treasury Department said that it differed "significantly" with the IMF and reaffirmed its belief in US policies, including the idea that a productivity-boosting mix of tax reform and regulatory relief would result in more sustainable economic growth.
While the IMF praised the US tax reforms for addressing what it said were long-overdue simplifications and reductions in the corporate rate, it added that some features favor the wealthy and run "counter to the authorities' objectives of increasing equity."
The IMF suggested that "it would be preferable to recalibrate the rate structure in order to concentrate tax relief to those earning close to or below the median income."
The New York skyline with Brooklyn BridgeImage: picture-alliance/S.Reboredo
Upgrade US infrastructure
Additionally, the report says the government has failed to make allowance for needed spending to upgrade US infrastructure, which would help boost economic growth in the long term.
"The combined effect of the administration's tax and spending policies will cause the federal government deficit to exceed 4.5 percent of GDP by 2019. This is nearly double what the deficit was just three years ago," the report added.
The IMF report marked the harshest assessment the Washington-based lending agency has ever produced on the economic policies of its largest member country.
A brief history of the anti-globalization movement
Whenever heads of state and global financial institutions come together, protest is not far away. Critics of globalization have been taking action for 20 years - also in the name of nature. DW looks back.
Image: picture-alliance/dpa/C. Sabrowsky
'Battle of Seattle'
The "Battle of Seattle" in 1999 marked the unofficial start of the anti-globalization movement. Organizing under the radar, this new protest movement burst onto the scene with tens of thousands taking to the streets - and shutting the city down. Protesters criticized the World Trade Organization (WTO) as promoting a "race to the bottom" in terms of environmental, human rights and labor standards.
Image: Getty Images/K.Stallknecht
Teamsters and turtles - together at last
The Seattle actions brought together a broad coalition, with rank-and-file labor unionists marching arm-in-arm with environmentalists. Previously at odds over jobs, the two factions now faced a common enemy: corporate dominance and the unchecked quest for corporate profit. International financial institutions promoting free trade became the symbols - and targets - of this broad new movement.
Image: Getty Images/AFP/J. G. Mabanglo
London: carnival against capital
"Think globally, act locally" is one of the slogans of the anti-globalization movement. Demonstrators organized protests as street parties in response to a crackdown from authorities and made calls to decentralize and globalize. As the G8 met in Cologne in June 1999, "J18" protests also took place in London and Eugene, Oregon. The emphasis on having fun drew many young people into the movement.
Image: picture-alliance/dpa
Genoa: Escalation and turning point
In 2001, thousands protested the G8 under the slogan "another world is possible." This alternative vision was against environmental destruction and the growing gap between rich and poor. Indeed, a criticism of the anti-globalization movement was that it was against so much - but what was it for? Protests in Genoa were marked by clashes between security forces and increasingly militant protesters.
Image: Getty Images/AFP/G. Julien
Things get real
As many as 20,000 policemen sought to keep the demonstrations under control - in vain. The legacy of Genoa included innumerable injuries, and even one fatality: Police shot dead the Italian Carlo Giuliani in a street battle. For years afterward, such summits were held in increasingly remote - and defendable - locations. For the protesters, this symbolized how they served - above all - the elite.
Image: picture-alliance/dpa/F. Monteforte
WTO in Doha
In 2001, the WTO met in Doha - for protesters, hard to reach - and with Qatar not exactly known to vaunt free speech. Was the era of mass anti-globalization demonstrations over? Doha's slick and elite image added fuel to the accusation that such institutions were insulating themselves against popular movements.
Image: Getty Images/ANOC/M. Runnacles
Toronto: More mass arrests
The G20 summit in Toronto in 2010 went down in history - as the scene of Canada's largest mass arrest. Police cracked down violently on demonstrators, arresting more than a thousand people - who were mostly later release without charge. The mass false arrests here had followed similar actions: in Washington at IMF/ World Bank protests in 2002, and at the FTAA protest in Miami in 2003.
Image: picture-alliance/dpa/S. Ilnitsky
'Secret' environment conference
In 2015, the G7 meeting at Schloss Elmau in Bavaria - likewise a remote and defendable location - took up a number of environmental topics, such as threats to the world's oceans. G7 countries vowed to more effectively and intensively work on fighting waste in the seas. Environmental topics appeared to have broken through to agendas that previously had been dominated by economic ones.
Image: Getty Images/AFP/C. Stache
Tempering the powder keg
For the G20 to set its 2017 meeting in the major metropolis of Hamburg could be seen as a reconciliation. Currently in the rotating presidency of the G20, Germany has been praised by civil society groups for its attempts to engage, such as here at the "Civil20" meeting in June. Climate change is at the top of Germany's G20 agenda - reflecting increasing concern over the issue worldwide.
Image: Reuters/F. Bimmer
Camping for the movement
In Hamburg, urban camping should reduce the environmental footprint of protesters - although a conflict over whether to allow such camping within the city has been a bone of contention. Again, 20,000 police will attempt to keep order during the summit. An atmosphere similar to that of a summer music festival is tempered with serious undertones as protests get underway.
Image: picture-alliance/Zumapress/J. Widener
Walking the talk
As the most polluting fossil fuel, coal is a clear target. Greenpeace activists pulled alongside the Chinese coal freighter "Golden Opportunity" in Hamburg's port to point out Germany's hypocritical position on the topic. Similar actions are surely to come - learning from the anti-globalization movement, the climate justice movement has built a broad coalition. It's not just eco-freaks anymore!
