In blog post published today, IMF noted that US-China trade tensions have “negatively affected consumers as well as many producers in both countries.” It pointed out while tariffs have reduced trade between the two countries, “bilateral trade deficit remains broadly unchanged”. It also warned that “latest escalation could significantly dent business and financial market sentiment, disrupt global supply chains, and jeopardize the projected recovery in global growth in 2019.”

In the global level, recently announced measures and envisaged new US-China tariffs will “subtract about 0.3 percent of global GDP in the short term, with half stemming from business and market confidence effects.” Furthermore, ” failure to resolve trade differences and further escalation in other areas, such as the auto industry, which would cover several countries, could further dent business and financial market sentiment, negatively impact emerging market bond spreads and currencies, and slow investment and trade.”

In addition, “higher trade barriers would disrupt global supply chains and slow the spread of new technologies, ultimately lowering global productivity and welfare. More import restrictions would also make tradable consumer goods less affordable, harming low-income households disproportionately.”

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Full article “The Impact of US-China Trade Tensions

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