Mubasher: The continued protectionism stance in global trade and the escalated trade barriers may have a negative impact on the global economic growth in the long run, Qatar National Bank (QNB) Economics said in a new report.

Although US imports of steel and aluminum account for only 2% of the global goods trade, US President Donald Trump’s decisions to impose heavy tariffs on these imports may fuel global trade disputes and trigger “a retaliatory trade war”, the report stated.

Last week, the European Union (EU) criticised Trump’s decisions and hoped that the European countries would be exempted from these tariffs.

QNB further noted that the US measures do not come as a surprise, citing a historical background of measures that indicate a US administration “anti-trade agenda”.

The current steel and aluminum measures “are likely to reduce US imports by around 1%, all else equal, and will have a negligible impact on global growth. But if protectionist policies are ratcheted up, a material deterioration in trade flows could have a larger impact,” QNB stated.

The bank expected a 5% decline in demand on US imports would lead to a 0.2% fall in global economic growth, while lower expected profits, consumer spending, and investment plans would likely reduce growth by a range of 0.2% to 0.3%.

“In addition to slower growth, trade barriers would push up domestic inflation through higher import prices, lower profitability would slow capital flows and governments would likely need to step in to prop up growth, increasing fiscal deficits and public debt levels,” QNB added.