With global growth already slowing down, starting a trade war now between the U.S. and the European Union would be both a political and economic mistake, French Finance Minister Bruno Le Maire said Thursday.
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That warning came in response to a question from CNBC about whether Le Maire felt worried that the next leg of a global trade war will center on the U.S. and the EU. In two Twitter posts this week, U.S. President Donald Trump hit out at the bloc, declaring it’s “a brutal trading partner.”
Trump on Twitter: Too bad that the European Union is being so tough on the United Kingdom and Brexit. The E.U. is likewise a brutal trading partner with the United States, which will change. Sometimes in life you have to let people breathe before it all comes back to bite you!
“We have to avoid a trade war. We’re facing a slowdown both at the global level and the European level and the reason why there is such an economic slowdown is that there are trade tensions all over the world,” the French minister told CNBC’s Joumanna Bercetche at the World Bank and International Monetary Fund meeting in Washington.
“There are trade tensions between the U.S. and China. We should not add trade tensions between the U.S. and the EU, it will be a political mistake and an economic mistake too,” he added.
Trump on Twitter: The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!
Since taking office, Trump has called out major trading partners including the EU, China and Canada for what he deemed unfair practices that affected American workers and companies. Trump increased tariffs on some U.S. imports, which led to a global trade fight that many governments and analysts blamed for hurting economic activity.
The IMF this week slashed its forecast for global growth for the third time since last October. The fund said the world economy is projected to grow by 3.3 percent in 2019 — down from an earlier forecast of 3.5 percent.
European economies are expected to be among the largest contributors to the global slowdown, according to the IMF. That’s coming at an inopportune time for the bloc, according to Pierre Moscovici, European commissioner for economic and financial affairs, taxation and customs.
The region, he explained, is currently preparing for another potential blow: The U.K. leaving the EU without a deal.
The U.K. and the EU earlier this week reached an agreement to once again extend the Brexit deadline until Oct. 31. The next six months should be spent on ensuring the U.K. doesn’t crash out of the bloc and slow down the European and global economy even more, Moscovici told CNBC’s Bercetche at the same Washington meeting.
“Let’s avoid a no-deal (Brexit),” he said. “We must really find a way to live together and for that, a deal — I don’t know which deal, it’s up to (the U.K.) to say precisely what they want — is much preferable to no deal.”