WASHINGTON • The collateral damage of the United States' trade wars is being felt from the fjords of Iceland to the auto factories of Japan.

Central bank governors and finance ministers traded grim tales of suffering economies at the International Monetary Fund and World Bank autumn meetings in Washington last week. Some also noted how far US policy has shifted from the 1940s, when Washington co-founded the IMF.

At that time, "the world economy had been hammered for over a decade by high tariff barriers, depression and war", prompting then-US Treasury Secretary Henry Morgenthau to champion a global economic system, World Bank president David Malpass told attendees at a session last week.

The US message then, Mr Malpass said, was: "First, there's no limit to prosperity. Second, broadly shared prosperity benefits everyone."

As the IMF's gathering of 189 member nations drew to a close, the unintended negative impacts of the trade wars were becoming clear, IMF managing director Kristalina Georgieva said. "Everybody loses."

The US, the world's largest importer, started a bitter tariff war with China, the world's largest exporter, 15 months ago. And President Donald Trump is in the midst of renegotiating, and sometimes upending, trade ties with many of the US' top trading partners.

The fallout will slow global growth this year to 3 per cent, the slowest pace in a decade, the IMF said in its latest estimate.

This pain is not being shared equally. The US remains the least exposed of the world's 20 largest economies to a drop in exports in part because of its massive domestic consumer spending base.

The damage is being particularly felt in European countries which "rely on exports and are open to trade", the European Union's economic and financial affairs commissioner Pierre Moscovici said.

More than 40 per cent of Germany's GDP was derived from exports last year, the most of any major global economy. Uncertainty in the business community is widespread, German Finance Minister Olaf Scholz told reporters.

German trade group BGA recently revised down its growth forecast for the country's exports this year to just 0.5 per cent, from 1.5 per cent. As a result, many companies are scaling back their investment plans, something that will have repercussions for years to come.

Mr Scholz said concerns over Britain's impending departure from the EU and the bloc's trade dispute with the US were clearly dampening global economic growth. "The most important problem remains those factors that we cannot measure - specifically the reluctance to invest," Mr Scholz said.

The pain is also being felt in countries that do not rely on exports, such as Iceland, which became the first developed economy to seek aid from the IMF after a 2008 banking collapse. Since then, it has rebuilt its economy in what has been called a miraculous recovery. Now, that is threatened.

Iceland, with a population of about 300,000, built foreign currency reserves on the back of the increase in visitors, governor of Iceland's central bank Asgeir Jonsson said, but those are dropping too. Trade links between countries have led to a more peaceful world in recent decades, but recent experience shows "you can never take global trade for granted", he said.

Last Friday, Japan's Cabinet Office, which helps coordinate government policy, downgraded its assessment of factory output for October. The softness in production was largely due to car exports to the US turning weaker, after growing steadily until the spring, a government official said.

The US has not been totally spared the impact of the trade wars. American farmers have been particularly hurt by Chinese tariffs on US agricultural products, prompting the Trump administration to give billions in aid to the farm belt.

Washington's imposition of steel and aluminium tariffs, and uncertainty about passage of a new North American free trade deal - the US-Mexico-Canada Agreement - have also stalled local economic development.

The trade tensions are helping to spur a push among African nations to create a more self-reliant continent. "We must take it upon ourselves to grow trade among ourselves," said Kenya's Acting Cabinet Secretary for Treasury Ukur Yatani Kanacho.

Senegal's Finance Minister Abdoulaye Daouda Diallo told reporters the US-China trade tensions would affect African nations in the energy sector and cut funds available on financial markets. The dispute underscored the importance of the African Continental Free Trade Agreement, he said.

Other emerging markets are also coming under pressure.

"Ukrainian exporters faced worsened conditions in global commodity markets," which drove down steel prices, said Ms Kateryna Rozhkova, the deputy governor of the country's central bank.

Making matters worse, "the intensification of geopolitical conflicts led to rising oil and natural gas prices in the world", she said.

Peru cut its 2019 economic growth estimate to 3 per cent in August, from 4.2 per cent, citing trade factors. Mexico is edging closer to a recession that its officials say might be more difficult to reverse than during the last downturn more than a decade ago.

Mexican Finance Minister Arturo Herrera said: "This slowdown is taking nobody by surprise, but there is very little appetite for cooperation."

REUTERS