“Let us not understate the macroeconomic impact,” IMF Director Christine Lagarde said, saying the tariffs will have a larger economic toll if they prompt retaliation from trading partners like Canada and Germany.

The IMF, in a review of U.S. economic policy, also took a much less optimistic view on America’s economic growth potential than that of the Trump administration.

While U.S. economic growth is expected to be strong this year and next, recent tax and spending measures could cause greater risks from 2020 onwards, the IMF said in its report.

Trump has riled key allies by pursuing protectionist trade policies, including the imposition of steel and aluminum tariffs on the European Union, Canada and Mexico.

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