AGUSTIN CARSTENS, general manager of the Bank of International Settlements (BIS), on Saturday delivered a scathing critique of rising protectionism, a not-so-subtle rebuke to U.S. President Donald Trump’s use of tariffs and trade talks to wring concessions from China, Mexico and many other countries.

Reversing globalization “could increase prices, raise unemployment and crimp growth,” Carstens, the former head of Mexico’s central bank, told fellow former and current central bankers at the Kansas City Federal Reserve Bank’s annual economic symposium.

Higher tariffs could drive up U.S. inflation and force the Fed to raise rates, driving up the U.S. dollar and hurting both U.S. exporters and emerging market economies in the process, Carstens said.

Protectionism also threatens “to unsettle financial markets and put a drag on firms’ capital spending, as investors take fright and financial conditions tighten,” he said.

The BIS released a research paper at the same time as Carstens’ speech that estimated revoking the North American Free Trade Agreement (NAFTA), as Trump has threatened, would mean a loss to gross domestic product of US$37 billion in Canada, US$22 billion in Mexico, and US$40 billion in the United States, with non-tariff trade barriers accounting for the lion’s share of the losses. Wages would also fall across North America, the research found.

Mexican and U.S. negotiators have narrowed trade-pact differences in recent days, and Canada will join trade talks once those have been resolved, but the overall future of NAFTA remains unclear.

The United States and China have also been wrangling over trade issues. “In the long term, protectionism will bring not gain but only pain,” Carstens said. “Not just for the United States, but for us all.”(SD-Agencies)