DESPARDES News Monitor — President Donald Trump has been warned by the west’s most influential economics thinktank that further escalation of the US-China trade war would unleash significant damage for the American economy, as well as the rest of the world.
Trump raised tariffs on $200bn of Chinese goods from 10% to 25% more than a week ago after Washington and Beijing failed to reach a deal on trade. China hit back with tariffs on $60bn of US imports.
The Paris-based Organization for Economic Co-operation and Development(OECD) said an intensification of the dispute between the two economic powers would likely knock as much as 0.7% off the level of global GDP by 2021-22.
Under such a scenario, the hit to the world economy from higher tariffs could be quantified at almost $600bn.
That’s not counting its impact on consumers in US.
Tariff war is already hurting the farmers in US. Several big companies have complained that the tariffs damage their profits, including iPhone maker Apple. Shoe giants Nike and Adidas are among 170 other firms who have urged Trump to end trade war, claiming higher tariffs are ‘catastrophic’ for consumers.
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Stock markets in the US and elsewhere around the world have also plunged over recent weeks.
The OECD’s downbeat assessment of the global economy as the standoff between the world’s two biggest economies continues to simmer, indicates that the world’s economic momentum had weakened markedly. It said both the US and China stood to lose out from the imposition of higher tariffs.
“The trade tensions have derailed global growth that we were seeing in sync in 2017. What’s happening is very worrying,” said Laurence Boone, the chief economist at the OECD.
