U.S.-China trade war may reduce global growth rate

  1. According to Fitch Ratings,the ongoing U.S.-China trade war escalation could reduce the World GDP growth by 0.4% points till 2020 and possibly lead to the lowest growth since 2009.
  2. Trade war is a situation where countries restrict each other’s trade by imposing tariffs or quotas on imports.The United States and China are discussing a trade deal to end the trade war.However,the latest round of US-Chinese trade negotiations had ended without a deal.
  3. Fitch has said that slowdown in global growth would happen if U.S. imposes import tariffs at 25% on $300 billion of goods from China and China retaliates by imposing a 25% tariff on $20 billion of U.S. imports.
  4. Fitch has also revised its global GDP estimates downward from 2.8% to 2.7% for 2019 and from 2.7% to 2.4% for 2020.
  5. The trade tensions would also lead to China’s growth rate to be reduced by 0.6% points and U.S. growth by 0.4% points in 2020.
  6. The countries which are not directly involved in the trade war would also see their GDP falling below baseline.South Korea would be the most severely hit with GDP more than 10 basis points below baseline in 2020.
  7. Further,India along with Turkey,France and Spain would be the least impacted by this trade war.
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