An escalation of the United States and China trade war would drive manufacturing away from both countries and likely cause job losses, but would not change their total trade balances, an International Monetary Fund (IMF) report showed yesterday.
The United States and China would see “sizable” losses in manufacturing as capacity moves toward Mexico, Canada, and East Asia if tariffs were hiked to 25 percent on all goods flowing between the two countries, the IMF said in its April World Economic Outlook.
That would escalate a tit-for-tat tariff battle between the two economic giants that has gripped global financial markets since mid-2018. The United States already has tariffs of 25 percent on $50 billion worth of Chinese goods and levies of 10 percent on another $200 billion. China has retaliated with duties on U.S. products, including key agricultural crops.