Observers see trade friction as solvable

The International Monetary Fund's top official is calling on countries to remain calm as relations simmer between the US and its trading partners, especially China.

A statement issued on Tuesday by IMF Managing Director Christine Lagarde came amid widespread concerns that the Trump administration is about to impose up to a $60 billion punitive tariff annually on China for its intellectual property policies and practices, as well as Trump's recent orders to impose tariffs on steel and aluminum imports in the name of national security.

"I joined others in reiterating that we should avoid the temptation of inward-looking policies and, rather, work together to reduce trade barriers and resolve trade disagreements without resorting to exceptional measures," Lagarde said in the statement issued at the end of the G20 Finance Ministers and Central Bank Governors meeting in Buenos Aires, Argentina.

Her message, without naming a country, is viewed by experts as being directed at the United States. She had previously warned about the dangers of protectionism, although she did not provide specific names.

Edward Alden, the Bernard L. Schwartz senior fellow at the Washington-based Council on Foreign Relations, said a possible trade war between China and the US could be highly damaging to global trade rules guided by the World Trade Organization.

"I worry these actions are going to mean the countries won't feel in the future like they don't have to abide by the WTO rules," Alden said on Wednesday in Beijing after addressing a workshop with the Center for China and Globalization.

He said China would play an important role in calming down trading issues. "This will be a big test for the Chinese leadership. The US is behaving in unpredictable ways. The world really needs China to behave in cautious and predictable ways."

He added, "We are going to need negotiations involving the US, China, EU and others to try to strengthen the rules and make them work in a new economic situation."

However, he said he was "worried about the fact that there is no negotiation going on between the US and China, mostly because of the resistance on the US side".

Frank Lavin, an undersecretary for international trade in the US Commerce Department from 2005 to 2007, described Trump as someone "who came from an environment where being provocative or disruptive has some benefits".

He said maybe it worked in Trump's real estate business, but it doesn't when the parties seek a normal relationship.

"But he has an old habit," said Lavin, who is chairman and CEO of Export Now. He said he hopes China and the US can "avoid any kind of trade war, trade conflict".

"And historically that tended to be the case," said Lavin, adding that there have been occasional tariffs and points of friction, but they have not been systemic in the long term.

"So I certainly hope we can stay in that spirit," he said.