March 16, 2021 | News | No Comments
The robust growth the American economy enjoyed in 2019’s first three months could weaken sharply if the country’s trade fights with China, Mexico and other countries worsen, according to the World Bank. The international lender expects U.S. GDP growth to fall to 2.5% this year and to 1.7% in 2020, down from 2.9% in 2018. Although government spending and corporate tax cuts have boosted economic activity this year, that impact is fading, the organization concludes in a new report.
“An increase in U.S. tariffs on all remaining imports from China, and retaliatory responses by China, would result in significant economic losses for exporters of the targeted products and lead to cascading trade costs to other sectors,” the bank said, noting that heightened trade tensions have weighed on U.S. exports to Asia and Europe. The Trump administration has threatened to subject $300 billion worth of Chinese goods to a 25% tariff later this summer. President Donald Trump last week also vowed to impose a 5% tax on all Mexican imports starting on June 10 unless the country acts to stem the flow of migrants to the U.S. Barring a deal, those levies would rise monthly until they hit 25% in October, a blow economists said would roil company supply chains and potentially push Mexico into recession.
Conflict over trade is also taking a toll on the global economy. The World Bank expects growth around the world to slow to 2.6% this year, down from 3% in 2018, citing the escalation of trade disputes as its No. 1 risk.