The intensifying trade war between China and the United States could "shock" emerging markets that are already in danger, the head of the International Monetary Fund said ahead of the 10th anniversary of the collapse of Lehman Brothers.
As a result, crises in Turkey and Argentina could spread, managing director Christine Lagarde said.
Saturday marks a decade since the collapse of the investment bank paralyzed global credit markets and helped trigger a downturn in economic activity known as the Great Recession.
Lagarde was France's finance minister from 2007 to 2011 before leaving to be the IMF chief.
After imposing steep tariffs on Chinese industrial goods in July, US President Donald Trump is poised to slap 25 percent tariffs on a further US$200 billion (HK$1.56 trillion) in imports from China. Trump has warned he is ready to impose yet more duties on all remaining US imports from the mainland.
Beijing has imposed counter-tariffs in equal measure.
If the world's largest two economies continue on this course, it could have a "measurable impact on growth in China" and could "trigger vulnerabilities" in neighboring Asian economies whose supply chains are closely linked to Chinese industry, Lagarde said.
Some emerging economies find themselves in precarious situations, with currencies weakening in part due to the strong US dollar and investors looking instead to the United States, where benchmark lending rates are steadily rising. Weakening emerging market currencies could also affect eurozone exporters such as Germany and Spain.
Earlier, Lagarde warned that financial systems are "safer but not safe enough" a decade after the global crisis started. She said the regulatory pendulum has begun to swing back toward looser oversight.
Lagarde offered a short-list of concerns over lingering vulnerabilities in the global financial system. She said too many banks, especially in Europe, remain weak and require more capital, while the increased size and complexity of institutions means "too-big-to-fail" remains a problem.
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