Finance ministers of the G-20 group of nations called on their leaders to "step up dialogue and actions to mitigate risks and enhance confidence" as the world struggles to cope with the rising damage from the protectionist trade war launched by the United States and its isolationist president, Donald Trump.
At the G20 meeting of Finance Ministers and Central Bank Governors over the weekend in Buenos Aires, Argentina, the ministers said trade disputes triggered by the U.S. threaten global economic growth. They also warned these disputes will escalate as Trump is expected to broaden U.S. tariffs to include more goods and commodities from the European Union (EU) and China.
The communiqué issued at meeting's end said that the global economic growth is becoming "less synchronized" while risks over the short and medium terms have risen significantly.
"These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies," said the communique. "We ... recognize the need to step up dialogue and actions to mitigate risks and enhance confidence."
EU financial affairs commissioner Pierre Moscovici warned that trade disputes are a real threat t global economic growth. "Protectionism, I want to insist on that, is good for no one," said Moscovici.
In a dig at one of Trump's infamous statements about a trade war being easy to win, Moscovici instead said, "Trade wars are not easy ... They create no winners. Only casualties."
Moscovici described the G-20 meeting as devoid of significant tense, an eye-opening statement given the simmering animosity between the U.S. and the rest of the G-20. He said countries must remain "cool-headed and maintain a proper sense of perspective." He noted that the EU remains open to dialogue with the U.S., while the same can't be said with the confidence of the Americans.
"That's why EU President Jean-Claude Juncker and EU Trade Commissioner Cecilia Malmstrom will meet with Trump" in Washington next week, said Moscovici. "We hope this meeting will be productive and successful."
Christine Lagarde, managing director of the International Monetary Fund (IMF) warned that a wave of tariffs) mostly from the United States) will significantly harm the global economy. Trump's trade war will reduce global growth by about 0.5 percent "in the worst-case scenario," said Lagarde.
She said the G20 meeting took place against the backdrop of continued strong but more uneven global growth. Lagarde noted, "the world economy is facing increasing risks, especially in the short term, from rising trade tensions, financial pressures in vulnerable emerging economies, and the return of sovereign risk in parts of the euro area."
During the meetings with the central bank governors, Lagarde encouraged policymakers to address these growing risks decisively and ensure that the recent period of strong growth endures and that the dividends are more widely shared.
"This is most crucial when it comes to safeguarding the open international trade system. I urged once more that trade conflicts be resolved via international cooperation without resort to exceptional measures," she said in a veiled rebuke of Trump.
The Gross World Product (GWP) was estimated to be worth about $77.9 trillion in 2014by the World Bank. A 0.5 percent reduction in GWP is equivalent to $390 billion. GWP is estimated to have grown 3.5 percent in 2017.
