Rising trade tensions between the United States and the rest of the world could cost the global economy $430bn (£324bn), with America “especially vulnerable” to an escalating tariff war, the International Monetary Fund has warned.
Delivering a sharp rebuke for Donald Trump, the Washington-based organisation said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide.
Although all economies would suffer from further escalation, the US would find itself “as the focus of global retaliation” with a relatively higher share of its exports taxed in global markets. “It is therefore especially vulnerable,” the fund said.
Trump raised the stakes in his mounting trade dispute with China last week by proposing 10% tariffs on $200bn of Chinese goods entering the country. Beijing was quick to warn of retaliation. The president also rattled European leaders by labelling the EU one of his greatest “foes” over trade, while leaving behind a trail of political chaos in Britain from his visit last week.
