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BRITAIN-TRADE-TARIFF-BANK-BOE
Carney warns on trade war fallout on global growth
LONDON, July 6, 2018 (BSS/AFP) – A global trade war at risk of
escalating may already be slowing world economic growth, Bank of England
governor Mark Carney warned in a speech on Thursday.
Carney spoke as the US was Friday set to begin enforcing tariffs on more
than $34 billion (29 billion euros) in Chinese imports.
“There are some tentative signs that this more hostile and uncertain
trading environment may be dampening activity,” Carney said in a speech
titled From Protectionism to Prosperity delivered in Newcastle, northeastern
England.
“For example, survey measures of global export orders and manufacturing
output have fallen back from highs at the start of this year,” added Canadian
national Carney, whose own country is embroiled in a cross-border trade war
with the US.
The BoE in addition forecast that further escalation in the trade war,
or ten-percentage point rise in tariffs between the US and all of its trading
partners could erase 2.5 percent off US output and one percent off global
economic output.
“Protectionism affects the real economy through three channels,” Carney
said.
“There are direct effects, through reduced trade flows, disrupted supply
chains and higher import costs. And there are indirect effects, via business
and consumer confidence and financial conditions.
“If implemented, the tariffs announced thus far (between the US and
China, the US and EU, and the US and its NAFTA partners, as well as the
potential US tariffs on EU motor vehicles and parts), will broadly double
average bilateral tariff rates, and could raise average US tariffs to rates
not seen in over 50 years,” Carney argued.
– Merkel olive branch? –
But in what appeared to be an olive branch to US President Donald Trump
as the EU battles to dissuade him from imposing hefty levies on European
cars, German Chancellor Angela Merkel on Thursday said she would support
possible talks with trading partners on lowering automobile tariffs.
Trump on Sunday charged that Europe is “possibly as bad as China” on
trade, as he reiterated that he is mulling import taxes of 20 percent on EU
cars, after having already imposed punitive duties on steel and aluminium.
The EU has slapped tariffs on iconic US products including bourbon,
jeans and Harley-Davidson motorcycles, as a symbolic tit-for-tat response to
the metal duties.
Canada has meanwhile hit back at the United States with retaliatory
tariffs on American summertime essentials including Florida orange juice,
ketchup and Kentucky bourbon, in an opening salvo in a North American trade
war with Trump.
And Beijing has vowed to respond to Trump’s looming action, with its own
tariffs on US goods as soon as Friday, arguing it has “no choice but to
fight” and accusing Washington of “opening fire on the whole world” with the
trade restrictions.
Not to be outdone, Washington has threatened to introduce even steeper
US counter-measures, potentially covering another $400 billion in Chinese
goods.
BSS/AFP/HR/1155