THE International Monetary Fund (IMF) warned world economic leaders Saturday that a recent wave of trade tariffs would significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in a dispute with China.

IMF Managing Director Christine Lagarde said she would present the G20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade.

“It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures ... is in the range of 0.5 percent of GDP on a global basis,” Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.

In the briefing note prepared for G20 ministers, the IMF said global growth may peak at 3.9 percent in 2018 and 2019, while downside risks have increased due to the growing trade conflict.

Her warning came shortly after the top U.S. economic official, Treasury Secretary Steven Mnuchin, told reporters in the Argentine capital there was no “macro” effect yet on the world’s largest economy.

Simmering trade tensions have burst into the open in recent months, with the United States and China — the world’ largest and second largest economies — slapping tariffs on US$34 billion worth of each other’s goods so far.

The weekend meeting in Buenos Aires comes amid a dramatic escalation. Trump on Friday threatened tariffs on all US$500 billion of Chinese exports to the United States.

Mnuchin said that — while there were some “micro” effects such as retaliation against U.S.-produced soybeans, lobsters and bourbon — he did not believe that tariffs would keep the United States from achieving sustained 3 percent growth this year.

“I still think from a macro basis we do not see any impact on what’s very positive growth,” Mnuchin said, adding that he is closely monitoring prices of steel, aluminum, timber and soybeans.

Mnuchin is trying to rally G7 allies to join the United States in more aggressive action against China, but they may be reluctant to cooperate because of U.S. tariffs on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures.

Mnuchin said he would tell G7 allies that the Trump administration is ready to make a trade deal with them and has placed a high priority on completing the North American Free Trade Agreement (NAFTA) with Mexico and Canada.

“If Europe believes in free trade, we’re ready to sign a free trade agreement,” he said, adding that a deal would require the elimination of tariffs, non-tariff barriers and subsidies. “It has to be all three issues.”(SD-Agencies)