The escalating trade war between China and the United States is doing nothing good for either of the countries. The economies of both countries are likely getting affected owing to the rise in product tariffs imposed by the governments.
According to the International Monetary Fund (IMF) report published on Tuesday, the U.S. economy is expected to grow 2.9 percent this year, the fastest pace since 2005. But the IMF economists predict that U.S. growth will slow to 2.5 percent next year from 2.9 percent this year due to the effect of the trade war with China.
As far as China’s growth is concerned, the country’s economy is projected to grow 6.6 percent in 2018, 0.2 percentage points lower than the fund’s previous forecast. The growth rate is expected to drop to 6.2 percent, which would be the country’s slowest growth since 1990, reflecting the new tariffs imposed.
The ongoing US-China trade conflict is likely to affect even economies beyond the two economic superpowers. As per the IMF predictions, the global economy will grow at 3.7 percent this year, the same as in 2017 but down from the 3.9 percent which was earlier forecasted for 2018 back in July.
“When you have the world’s two largest economies at odds, that’s a situation where everyone suffers,” said Maurice Obstfeld, the IMF’s chief economist.
Until now, Donald Trump led administration has imposed tariffs on roughly half of the products that China sells to the United States every year. Mr. Trump has reportedly threatened to increase the tariff cover to include all US imports from China if a trade deal between the countries is not finalized. Beijing has responded back by imposing tariffs on American goods worth more than $110 billion.
The latest world economy report was released during the IMF and World Bank annual meeting which is going on in Bali, Indonesia.