The escalating trade dispute between the United States and China could hinder the growth of the American economy, the International Monetary Fund warned Thursday.
The latest round of tariffs imposed by both countries could come with a “significant economic cost,” IMF spokesperson Gerry Rice said at a briefing.
“We expect U.S. growth would also be affected,” he said.
On Monday, President Donald Trump announced the U.S. plans to impose tariffs on an additional $200 billion worth of Chinese goods. The new tariffs, scheduled to go into effect on September 24, come on top of $50 billion worth of tariffs already imposed earlier this year.
Beijing on Tuesday retaliated by announcing it would impose tariffs on $60 billion worth of U.S. products including wheat and textiles. Trump responded by threatening to impose duties on nearly all Chinese imports.
Rice warned the escalation of tensions between the world’s two largest economic powers threatens to upset global markets and said neither country will benefit.
“There are no winners in a global trade war,” he said. “Should the escalation go further the economic costs for both countries and around the world will quickly add up.”
The latest round of U.S. tariffs will affect a large swath of imported commercial products ranging from dog food to bicycles.
Prior to their announcement, major American retailers including Walmart and Target urged the administration against imposing the new tariffs, warning they will hurt U.S. consumers.
“The immediate impact will be to raise prices on consumers and tax American business and manufacturers,” Walmart said in a letter to U.S. Trade Representative Robert Lighthizer.
China’s retaliatory tariffs seemingly target America’s agricultural and industrial sectors. In a Tweet on Tuesday, Trump said he believed the move is intended to harm him politically.
“China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me,” Trump said. “What China does not understand is that these people are great patriots.”
In July, the administration freed up $12 billion to subsidize farmers harmed by China’s retaliatory tariffs. Analysts, however, warned that the subsidies aren’t adequate to address losses incurred by the industry.
The White House on Monday said it would be willing to scrap its latest round of tariffs if China agrees to meet its long-stated trade demands, which include allowing American companies better access Chinese markets and dropping requirements that American companies share intellectual property with Chinese partners.
Although Chinese markets, which have already been slowing in recent years, have so far bared a greater cost from the trade dispute, there’s no sign yet that Beijing is willing to cave to Trump’s demands.