“Fair trade is a key boost for growth, for employment, for innovation, for productivity,” she said during a public interview with Bloomberg in Washington.
“It’s something that we should not throw away,” she added, “because … any periods of time where this country, the United States, has thrived, were periods of trade, not periods of ‘I’m going to retire behind my boundaries and play at home’.”
While China remains Trump’s chief target for such trade measures, the blanket 20 percent tariff that he has promised would also inevitably hurt European exporters.
Lagarde implicitly acknowledged Trump’s point, however, that the West should not allow China to keep flooding the world market with its products as it has done in recent years.
Without singling out China, she said: “Trade conditions have to be fair. They cannot be constantly subsidized in a very opaque and unfair way.”
In addition to the direct risk of its own goods being priced out of the U.S. market, Europe also faces the indirect risk that China might dump even more of its exports on Europe if it can’t get them into the U.S., adding to the woes of an economy that has lost momentum in recent months.
Lagarde was speaking on the sidelines of the annual meetings of the International Monetary Fund and World Bank. The IMF had warned earlier in the day that protectionism and the escalation of current conflicts are now the two biggest threats to the world economy.
While it still expects the world economy to grow by 3.2 percent this year, the IMF trimmed its forecast for next year to 3.2 percent from 3.3 percent in April.
