IMF managing director Christine Lagarde has warned countries that they must avoid trade protectionism to ensure global prosperity.
Speaking in Hong Kong on Wednesday, Ms Lagarde said she fears growing tension between the US and China over tariffs will lead to World Trade Organisition (WTO) rules being “torn apart”, which she called an “inexcusable, collective policy failure”.
“History shows that import restrictions hurt everyone, especially poorer consumers,” said Ms Lagarde.
“Not only do they lead to more expensive products and more limited choices, but they also prevent trade from playing its essential role in boosting productivity and spreading new technologies.”
Alluding to Donald Trump and Xi Jinping’s war of words on tariffs, the IMF chief called for an end to protectionist threats by world leaders which she believes has “undermined” confidence.
Attending a forum in Hong Kong, Ms Lagarde said that a global economic recovery is underway.
A trade dispute between the US and China gained traction in March, culminating in China imposing tariffs on US products such as pork to wine.
President Donald Trump had placed tariffs of 25 per cent and 10 per cent on Chinese steel and aluminium.
On Wednesday, China lodged an official trade complaint with the WTO against the US.