The Toll of Trade Wars

As U.S. President Donald Trump and Chinese President Xi Jinping were talking trade over the weekend in Osaka, Japan, a Reuters report detailed some of the tolls the trade dispute has taken. President Trump has said repeatedly that bad trade deals with China and other countries have cost millions of American jobs. Tariffs between the two largest economies in the world have done some damage, including disrupting international supply lines and shaking global financial markets. Fitch Ratings estimates that the U.S. slapping tariffs on another $300 billion in Chinese goods would chop .4 percent from the world economic output. The International Monetary Fund has forecast a .5 percent reduction, equal to the entire GDP of a country like South Africa. Swiss bank UBS says an escalation in U.S. tariffs would stunt global growth by 75 basis points over the next six quarters. An impact like that would resemble a mild global recession. Trump has said, “China pays the tariffs” that he imposed on their goods. However, Reuters says that’s not true. The tariffs are paid by companies that import Chinese goods. Those same companies have to pass those higher costs onto the buyers and consumers of their products.