China US Trade War

The world’s falling apart, apparently

Well the head of the IMF says so anyway

The head of the International Monetary Fund (basically a big piggy bank for the world that lends money if a country is in distress and gives advice on how they should run their economies) has warned that the world trade system is being "torn apart".

What it means: Pretty strong words. Christine Lagarde (AKA the IMF boss) said in a speech that the escalating 'trade war' between the US and China (both are trying to restrict the sale of the others' products in their own countries by making them more expensive) could have negative consequences.

But Lagarde doesn't think that's the answer. Then again, IMF would say that. They think that the more open international trade is, the better. Others (like Trump) would disagree: they'd rather close off their borders, build up the capacity of their industries without competition from abroad, and then go back out.

Who's right? As always, depends – workers may benefit from being part of international labour regulations, but they may also get better salaries in a more closed off economy. Then again, consumers may end up paying higher prices if there's less competition from abroad. There's a lot of 'what-ifs' to who's right and who's wrong, but Lagarde seems pretty certain where she stands anyway.

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