World Economic Leaders Warn of Fallout From Trade War Between U.S. and China

“We’re seeing actions in China to restrict the trade of canola,” said Bill Morneau, Canada’s finance minister. “We don’t see that as something related to the quality of the canola, but rather as a trade response to our legal system.”

All the friction is taking a toll on many of the world’s largest economies as businesses race to reorient their supply chains and anxiously await new trade barriers. Mr. Trump has added to the uncertainty in recent weeks, threatening tariffs on allies like Mexico to solve problems, such as immigration, that have nothing to do with trade.

This month, the World Bank and the International Monetary Fund warned about the prospects of slowing economic growth, and both pointed to widening trade disputes as a culprit. The bank noted that global trade growth has slowed to its lowest level in a decade while the I.M.F. said that the tariffs that the United States and China placed on each other’s imports could reduce global gross domestic product by 0.5 percent, or $455 billion, next year.

The Trump administration views America’s relative economic strength as a source of leverage, but there are also signs that the tariffs are taking a toll in the United States.

In a survey of businesses conducted by the Federal Reserve in May, contacts across the central bank’s 12 districts mentioned tariffs 37 times, up from 19 in the April report and 18 in March.

Businesses reported a range of experiences: Some said they were passing along cost increases, while others said they could not. Pecan farmers in the Dallas district were considering shifting into hemp and away from their tariff-impaired crop, while clothing stores in Richmond, Va., reported that they had stocked up on inventory to avoid import taxes and could not place new “seasonally appropriate” orders.

In Fukuoka, a coastal city known as a trade gateway to the rest of Asia, finance ministers debated how to assess the effects of trade tensions on the global economy. The United States, expressing skepticism its protectionist measures are dampening growth, was an outlier. In drafting the communiqué, it resisted language that would call for trade tensions to be resolved.

Source Link

Get more stuff like this

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.