The International Monetary Fund (IMF) said Thursday that companies in the U.S. are paying almost all the costs from Donald Trump's tariffs on Chinese imports and warned that the escalating US-China trade war will "jeopardize" 2019 global growth.
"Consumers in the U.S. and China are unequivocally the losers from trade tensions," IMF chief economist Gita Gopinath said in a blog post.
She and her co-authors directly refuted President Donald Trump's claim that the tariffs are paid by China and provide a windfall for the U.S. treasury, saying "tariff revenue collected has been borne almost entirely by U.S. importers."
“Some of these tariffs have been passed on to U.S. consumers, like those on washing machines, while others have been absorbed by importing firms through lower profit margins,” the IMF chief economist said.
The economic damage will be even worse if Trump goes through with the threat to impose steep tariffs on all goods imported from China, as that "will subtract about 0.3 percent of global GDP in the short term, with half stemming from business and market confidence effects," she said.
He then more than doubled tariffs on 200 billion U.S. dollars in Chinese goods and threatened to hit the remaining 300 billion U.S. dollars in products imported each year with 25 percent tariffs.
"While the impact on global growth is relatively modest at this time, the latest escalation could significantly dent business and financial market sentiment, disrupt global supply chains and jeopardize the projected recovery in global growth in 2019," she warned in the blog post.
"This type of scenario is among the reasons why we referred to 2019 as a delicate year for the global economy."
In addition, if tariffs escalate this will make a host of consumer goods less affordable, "harming low-income households disproportionately."
The IMF in April cut its 2019 forecast for global growth to 3.3 percent, the lowest since the financial crisis, citing higher tariffs weighing on trade and weakness in some advanced economies.