Reference News Network, July 7 report: Bloomberg News published an editorial titled "The US-led trade war could lead to a global economic downturn" on July 3. The following is a translation:

The shift in the United States' trade policy this year will not only bring serious setbacks to the United States but also severely affect the whole world. Predictions from the International Monetary Fund, the World Bank, and the Organization for Economic Co-operation and Development have highlighted the global consequences of the change in U.S. trade policy, which are often overlooked in internal debates in Washington.

According to assessments by these international organizations, trade fragmentation and deep-rooted policy uncertainties may have brought the world economy to a turning point. Achievements made over the past few decades in reducing poverty and improving living standards are now at risk.

The World Bank estimates that the tariff measures implemented by the United States will reduce global economic growth by about one percentage point in 2025 and 2026, with an average annual growth rate of less than 2.5%, far below historical norms. The International Monetary Fund and the OECD hold basically the same view.

But it's not just the numbers that are the same; the reasons are also similar: all three international organizations emphasize the impact of increased trade barriers and heightened uncertainty on global economic growth.

The tariff measures initially have the most severe impact on the United States and other developed economies. Subsequently, the damage spreads more widely to other economies, especially some emerging and developing economies, due to reduced demand and investment, including decreases in foreign direct investment and portfolio flows.

Certainly, these predictions are only preliminary at the current stage. However, the risk of an economic downturn is definitely greater overall. The U.S. average "effective" tariff has risen from 2.3% in 2024 to (currently) about 15%, which is already astonishing: this is the highest level in about a century. Just by itself, such high tariffs would hinder trade, disrupt supply chains, and make people hesitant to invest early. Tariffs could also lead to higher inflation rates, which might disrupt financial markets—again, the impact is not limited to the U.S. financial markets.

But a 15% tariff rate may not even be the upper limit. The White House insists that imposing a 50% tariff on steel and aluminum products is very reasonable. Moreover, the continuous tariff announcements from the White House indicate that it is using "strategic uncertainty" as a new negotiation tool. Its goal is to make countries that were previously trade partners feel uncertain about the U.S., making them easier to intimidate. The result is that all agreements are reversible, meaning that these agreements are of no value in planning. If the results of the tariff policy do not meet Washington's goals, the U.S. will further raise trade barriers.

It can be expected that other countries will take new countermeasures while trying to reduce their dependence on U.S. producers and consumers. Severe uncertainty will drag down the main engine of economic growth—investment. Decades of global income growth will come to a halt. The process of eliminating global poverty will also be hindered.

While the U.S. is harming itself with such reckless policies, it should also think about what pain it is causing to other parts of the world. (Translated by Hu Xue)

Original article: https://www.toutiao.com/article/7524246885344576038/

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