FRANKFURT, Jan 30 (Reuters) - Punitive tariffs imposed recently by the United States risk setting off a trade war that would only produce losers, Jens Weidmann, the president of Germany’s central bank said on Tuesday.
The U.S. imposed steep import tariffs on washing machines and solar panels earlier this month, and President Donald Trump threatened to confront the European Union over what he called “very unfair” trade policies.
“Trade limiting measures often provoke counter-reactions and run the risk of ending up in trade conflicts that only produce losers,” Bundesbank President Jens Weidmann said in a speech in Hamburg.
“The recent imposition of punitive tariffs on solar panel and washing machine producers by the U.S. is an example of rhetoric turning into action,” he added, arguing that such conflicts end up harming everyone.
Weidmann, who also sits on the European Central Bank’s interest rate-setting Governing Council, argued that while open trade is unquestionably beneficial, globalisation also produces losers and without targeted measures to help those left behind, the benefits of open trade would be questioned.
He also argued that while the U.S. has lost low skill manufacturing jobs to China, it has created more jobs in higher-end sectors and its consumers benefited from cheaper products.
To mitigate the negative impact of globalisation, Weidmann advocated better schools, flexible labour and product markets, open trade and growth-friendly economic policies. (Reporting by Balazs Koranyi; Editing by Hugh Lawson)