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The International Monetary Fund has cut its U.S. growth forecast for next year, warning that President Trump’s protectionist trade policies will harm growth domestically and around the world.
In its World Economic Outlook, released this week, the IMF says the U.S. economy is expected to grow 2.9 percent this year and 2.5 percent next year. The organization had forecast in April that the U.S. economy would grow 2.7 percent in 2019.
“If you have the world’s two largest economies at odds, that’s a situation in which everyone is going to suffer,” said Maurice Obstfeld, chief economist at the IMF.
The IMF repeatedly singled out Trump’s trade actions as disruptive to global growth and prosperity, especially the imposition of tariffs on roughly half of the goods that the United States imports from China. The IMF also reduced its growth forecast for China next year to 6.2 percent because of the trade war, down from 6.4 percent in April.
The escalating trade wars could “dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade,” the IMF wrote in its report. “Higher trade barriers would disrupt global supply chains and slow the spread of new technologies, ultimately lowering global productivity and welfare. More import restrictions would also make tradable consumer goods less affordable, harming low-income households disproportionately.”
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