The world economy could contract by the size of the combined French and German economies, if there is a broad-based trade war between the world’s major economies, the International Monetary Fund (IMF) has told.
It comes as concerns are heightened ahead of the possible re-election of Donald Trump. Trump says he plans to introduce a universal tax or tariff of up to 20% on all imports into the US, while the European Union is already planning retaliation if Washington goes ahead with the new levy. Last week, Trump said “tariff is the most beautiful word in the dictionary”, and global markets and finance ministers are now beginning to take seriously the prospect of him enacting the ideas.