Sydney, November 1:

A Democrat in the White House after next week’s presidential election could usher in a round of protectionism that would do further damage to the world economy, media baron Rupert Murdoch warned.

The chairman and chief executive of US-based News Corp today said imposing new tariffs on Chinese imports could be the blue touch paper for a trade war.

“For the past some years, some Democrats have been threatening to do things like put extra tariffs (against Chinese imports) if they don’t change their currency,” he told The Australian newspaper. “If it happened, it could set off retaliatory action which would certainly damage the world economy seriously.”

Australian-born Murdoch, who is now a US citizen, said that if senator Barack Obama won the presidency he could be pressured to implement protectionist measures. “Presidents don’t often behave exactly as the campaign might have suggested because they become prisoners of all sort of things, mainly circumstances and events,” he said.

Murdoch labelled as “rubbish” Obama’s plan to give tax rebates to 95 per cent of Americans. “Forty per cent don’t pay taxes, so how can he give them a tax cut?” he said. Murdoch said a rise in protectionism “could add to tensions in the world financial system, world trading system and eventually all the way down to employment.”

He also warned against believing it was in the power of governments to heal the financial system.