More Tariffs Could Drive Down China’s Economic Growth: IMF
The International Monetary Fund (IMF) has warned that if the US imposes more tariffs on Chinese goods as a result of the trade war, it could impact China’s economic growth significantly. Previously, the IMF had downgraded China’s economic growth forecast to 6.2% with the assumption that there would be no more tariff hikes.
At the G20 summit in June, the US and China had previously called for a truce on their dispute to allow negotiations to resume again. However, talks apparently broke down once again after the US trade team visited Shanghai a couple of weeks ago, following which Trump had suddenly announced another round of tariffs of 10% on an additional $300 billion worth of Chinese imports into the US.
Trump has also warned that there could be more tariff hikes in the future if China continued to delay finalizing the trade deal. If Trump raises tariffs to 25% on the remaining Chinese imports, Chinese economic growth could reduce by as much as 0.8% over the next one year. The latest round of tariffs could reduce growth by 0.3%, according to IMF’s estimates.
There have been no positive developments since then and the trade dispute only appears to be intensifying further between the two countries. The US has accused China of manipulating its currency after the Yuan fell below the key level of 7 against the US dollar, even as China decided to halt all agricultural goods’ imports from the US.
For now, the IMF forecasts that the Chinese economy could grow at 6% in 2020 and at 5.5% by 2024 as a result of the ongoing trade war.
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