'Do Not Provoke': IMF Chief Urges Calm As US-China Trade Tensions Threaten Global Economy

The International Monetary Fund's chief sent a message to countries to stay calm amid renewed trade tensions between US and China.

“Our message to everybody is: be calm,” said IMF Managing Director Kristalina Georgieva in an interview Thursday with Bloomberg Television. “And to China: be careful, do not provoke other countries” in ways where they may see you as a threat.

The world economy has shown resilience in the face of the US tariffs shock this year and Georgieva credited this in part to nations not retaliating against the high levies imposed by the Trump administration. 

Still, she warned that countries should “not be complacent.” With many Chinese goods redirected to other parts of the world, including Asia and the European Union, other countries might be tempted to take protectionism measures.

“If these recipients of Chinese goods feel the heat and decide that they too should impose tariffs, we may still have the risk of a trade war, moving from one place to another,” she said.

The latest trade spat between the world's two largest economies dominated the IMF's gathering of financial ministers and central bankers this year. After China announced new curbs on rare earths critical to many industries last week, President Donald Trump threatened another round of massive tariffs on Chinese goods and European countries vowed to work on a coordinated response. 

US Treasury recently announced a $20 billion swap line to support Argentina in the face of increased volatility ahead of midterm elections this month, on top of an existing $20 billion approved by the IMF in April. Georgieva said the IMF is working “hand-in-hand” with the authorities on both sides.

She said she sees “a genuine change” for the better. “I think that there is a still fairly strong support in Argentina for getting the country to be a normal economy in which regulations are meaningful and for purpose,” she said.