WASHINGTON, March 8 (Reuters) - International Monetary Fund Managing Director Christine Lagarde said on Thursday that she feared a "tit-for-tat" escalation of trade retaliation over U.S. President Donald Trump's steel and aluminum tariffs that would sap business confidence and investment.
Lagarde, speaking at a Washington Post forum on women's issues, said it was not the direct economic impact from the tariffs that concerned her most, but its role as a "trigger" for retaliatory responses from trading partners worldwide.
"It is that escalation that is in and of itself dangerous for the impact that it has on all those economies, and furthermore for the impact that it has on confidence," Lagarde said, noting that trade has been an engine of growth that has fueled a stronger global recovery in recent months.
"And confidence is a super-precious good that builds over time and can be destroyed very quickly," Lagarde said. "If the perception of investors around the world is that this is uncertain, and you never know where the tariffs are going to go, how high, how low, against whom ... then you step back and you don't invest, you wait and that confidence impact could be significant."
Her comments followed Trump's announcement of 25 percent U.S. import tariffs on steel and 10 percent on aluminum. The tariffs are due to start in 15 days and initially exempt Canada and Mexico.