The heads of the International Monetary Fund (IMF) and the European Central Bank (ECB) have cautioned against escalating global disputes amid increasing trade barriers and tariffs.
Both Christine Lagarde and Mario Draghi said that international trade conflicts, particularly between the United States and China, as well as other industrialized countries and Europe, would affect global growth negatively.
This came during the 8th ECB conference focused on central, eastern and south-eastern European (CESEE) countries on Wednesday in Frankfurt.
Meantime, soaring trade tensions between the world’s largest economies reached its highest level as negotiations between the US and China stalled on the back of an increasing desire to place more tariffs upon imports.
“Global growth has been subdued for more than six years and the largest economies in the world are putting up, or threatening to put up new trade barriers. And this might be the beginning of something else, which might affect us all in a more broad way,” Lagarde said.
“These troubling developments will create headwinds for all, but certainly for the CESEE growth model, a model that has relied on openness and integration,” she added.
Lagarde warned that these troubling developments will create an unfavorable climate for all.
On his part, Draghi said that the business model in Central and Eastern European countries is vulnerable to shocks as car exports in these countries account for nearly 30 percent of total manufactured exports, making them more defenseless against US President Donald Trump’s threats to increase tariffs on European cars and spare parts.
Last year, Trump threatened to impose 25 percent tariffs on all EU car imports, however, the decision was postponed for six months.
Finally, the two officials emphasized that the threat of US tariffs over European imports indicates that some European countries such as the Czech Republic, Slovakia, Poland, and Romania would undergo potential risk.