WASHINGTON: The International Monetary Fund warned on Friday that U.S. import tariffs on steel and aluminum would likely cause economic damage to the United States and its trading partners, and urged countries to resolve trade disputes without resorting to retaliatory measures.
"The import restrictions announced by the U.S. President (Donald Trump) are likely to cause damage not only outside the U.S., but also to the U.S. economy itself, including to its manufacturing and construction sectors, which are major users of aluminum and steel," the IMF said in a terse statement.
Trump said on Thursday he planned to impose tariffs of 25 percent on steel imports and 10 percent on aluminum products that were designed to safeguard American jobs in the face of cheaper foreign products and would be formally announced next week.
A day later, the European Union raised the possibility of taking countermeasures, France said the duties would be unacceptable and China urged Trump to show restraint. Canada, the biggest supplier of steel and aluminum to the United States, said it would retaliate if hit by U.S. tariffs. The IMF did not elaborate on the economic damages.
It is currently in the midst of updating its global economic forecasts ahead of April meetings of its 189 member countries.
"We are concerned that the measures proposed by the U.S. will, de facto, expand the circumstances where countries use the national-security rationale to justify broad-based import restrictions," IMF spokesman Gerry Rice said in the statement.
Meanwhile, Germany and France will bring forward plans to introduce a common corporation tax system in response to tax cuts announced by the Trump administration, Chancellor Angela Merkel said.
The announcement comes amid unprecedented tensions between the U.S. under President Donald Trump and its long-standing European allies over Washington´s planned introduction of steel tariffs that Europe fears will distort global trade. "We have decided, with more emphasis than in the past, to push on with the ´Common Corporation Tax with France´ project," Merkel said in her regular weekend video podcast when asked how Germany´s relative competitiveness could be maintained.
"That means when we decide on a joint corporation tax assessment basis for France and Germany, we will also consider the realities that are unfolding in America," she added in response to questions by a business studies student.
At the end of last year, the Trump administration floated a tax plan that envisaged slashing the corporation tax from 35 percent - "very high", according to Merkel - to 21 percent, prompting protests from European finance ministers. The Europeans fear that international tax competition will increase because of the U.S. moves.
So EU members, especially Germany and France, see the need for more tax policy cooperation among themselves to make their markets more competitive.