IMF chief and Investor Warren Buffett says US-China tensions 'threat' to world economy

"Clearly the tensions between the United States and China are the threat for the world economy," Christine Lagarde told journalists at a conference in Paris, adding that recent "rumours and tweets" made an agreement between the countries less likely.

Paris: The head of the International Monetary Fund said on Tuesday that fresh trade tensions between the United States and China were the main threat to the world economy.

"Clearly the tensions between the United States and China are the threat for the world economy," Christine Lagarde told journalists at a conference in Paris, adding that recent "rumours and tweets" made an agreement between the countries less likely.

Investor Warren Buffett says if the U.S. has a full-blown trade war with China, it will be bad for the entire world. Buffett appeared on CNBC on Monday with Berkshire Hathaway Vice Chairman Charlie Munger and Microsoft co-founder Bill Gates.

Buffett said Trump is making a "nuclear threat" that may bring the Chinese to the table. But it's impossible to predict the outcome because both countries' leaders are used to getting their way. "It's a dangerous game," Buffett said.

Munger said ending up with a settlement that includes some tariffs and both sides feel somewhat disappointed would be a good thing.

President Donald Trump jolted global markets on Monday by threatening on Twitter that tariffs already imposed on USD 200 billion in Chinese exports to the US would more than double to 25 per cent on Friday from their current level of 10 per cent.

Also speaking at the Paris Forum event, French Economy Minister Bruno Le Maire warned about the impact of a trade war between the world's two biggest economies.

"We are following the current negotiations very closely between China and the United Staters and we want them to respect the principals of transparency and multilateralism," he said.

He called on the two sides to "avoid taking decisions that would threaten and would undermine global growth in the months ahead."

"Increasing tariffs is always a dead-end and a negative decision for the whole world, for the United States, for China, for the eurozone, for Europe and world growth," he said.

China said on Tuesday its top trade negotiator will visit the United States for talks with his American counterparts this week.

The countries have been locked in talks to resolve tensions that have seen both of them impose tariffs on goods worth USD 360 billion.

Treasury Secretary Steven Mnuchin has described the negotiations as 90 per cent complete but told reporters that in recent days the talks went "substantially backwards", which he blamed on China reneging on previous commitments.