An all-out trade war would severely damage the US and Chinese economies but could also be a boon to countries like Canada and Mexico, the International Monetary Fund said Wednesday.

The world's top two economies themselves would be the biggest losers in the event of a 25 percent hike in duties on all trade in goods, the IMF said in a report released ahead of next week's spring meetings, to be held jointly with the World Bank.

Bilateral US-China trade could fall by up to 30 percent in the short-term as a result and by as much as 70 percent later on -- taking sizable chunks out of both countries' economies.

The 2019 spring meetings fall just as US and Chinese officials say they are in the home-stretch of negotiations to resolve their eight-month trade war, in which Beijing has put tariffs on all its US merchandise imports while Washington has slapped duties on about half of its Chinese imports -- more than $360 billion in two-way goods trade.

Citing success in the talks, US President Donald Trump has suspended plans to raise duties on a $200 billion tranche of Chinese goods to 25 percent, keeping them at the current 10 percent.

According to a range of models cited by the report, the hypothesis showed annual growth in China could be 1.5 percent lower, while such a scenario could shave as much as 0.6 percent off growth in the United States.

"The effect on China is typically larger across all models, as exports to the United States represent a larger share of the Chinese economy (than vice versa)," the report said.

Under the scenario explored by the IMF, Canada and Mexico could ultimately benefit as they export more to the United States, making up for the shortfall in US imports from China.

And according to one model, these shifting export relations among countries would mean that, while the US trade deficit with China would fall somewhat, there would be "no economically significant change" in either country's overall trade balance.

A separate statistical model showed China would ultimately cease to be "the number one exporter of electronics and machinery to the United States," as Canada, Mexico and other Asian countries picked up the slack.

Related Links
Global Trade News

Tweet

Thanks for being here; We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor $5 Billed Once credit card or paypal		SpaceDaily Monthly Supporter $5 Billed Monthly paypal only

Brussels increasingly wary of long Brexit delay
Brussels (AFP) April 2, 2019
EU leaders still want to avoid the chaos of a "no deal" Brexit, but concern is rising that giving Britain a long delay poses risks of its own and would solve little. With less than two weeks until Britain ends its four-decade-old EU membership, UK lawmakers are still deadlocked over what kind of divorce they want. European negotiators insist the deal they signed with Prime Minister Theresa May last November is the only guarantee of an orderly exit. But May has repeatedly failed to ratify the ... read more