Trade friction to hamper US, world economy: US trade expert

Published: September 29, 2018 14:19:02 | Updated: October 02, 2018 16:05:54

Representational Image

The trade friction between China and the United States will lower the global economic growth rate and at the same time have a spillover effect on protectionism, a trade expert has said.

"If one country breaks the rules, particularly a big one, and gets away with it, it becomes easier for others to do the same," said the US trade expert on Friday.

Talking about the impact on US economy, he said the friction will negatively affect the US economy by offsetting tax cut benefits and causing higher consumer prices, reports Xinhua.

William Reinsch, the school chair in international business at the CSIS, said that the US economy is benefiting right now from the tax cuts since the end of last year.

But the fast growth will be offset by trade declines and higher consumer prices which will eventually change the momentum of economic growth.

"Most economists predict that the tax cut effect will begin to decline as well after a year or so and ultimately I think it will be a disaster because we have to pay for it eventually," said Reinsch.

He also predicted that the impact of trade tension on American consumers will take some time to show up, adding "the significant impact is not likely to occur until the first or the second quarter next year."

The United States has announced its decision to impose additional 10 per cent tariffs on 200 billion US dollars worth of Chinese products from Sept. 24, saying that it will take other escalating tariff measures.

In response, China announced it will levy additional tariffs on US products worth 60 billion dollars starting from Sept. 24.

Share if you like