World Economy

Escalation of Import Tariffs Could Impact Severely on Global Growth

Escalation of Import Tariffs Could Impact Severely on Global GrowthEscalation of Import Tariffs Could Impact Severely on Global Growth

Import tariffs will have far-reaching implications and though the impact is manageable for now, escalation in this aspect could mean significant downside to global growth, says a report.

In recent months the intensity and scope of trade measures have broadened out significantly and against this backdrop, investors have been incrementally more concerned about the impact of trade tensions on global growth, PTI reported.

According to global financial services major Morgan Stanley, global growth would be impacted by just 9 basis points from the trade measures which have been or are about to be implemented.

“A meaningful impact of 21 bps on global growth could result if a 10% tariff was imposed on $200 billion worth of China’s imports and a 22.5% tariff levied on EU car imports,” the report said.

Further, this impact would rise to 31 bps if all imports from China were affected and further to 81 bps in a scenario of a 25% tariff hike across all imports from both China and the EU, the report added.

The countries that would be most affected include China, US, eurozone and some major trade partners such as Taiwan, Canada, Korea, Mexico as well as some other smaller European economies. According to the report, significant escalation will impart material downside to global growth.

“The starting point of strong global growth provides some buffer, but significant downside risks could emerge if things escalate significantly from here,” it noted.

US ports, which handle hundreds of billions of dollars in merchandise each year, will be the first to feel the pain if the Trump administration’s trade war begins to slow the global economy, CNBC reported.

So, as the White House threatens to impose higher duties on $200 billion worth of Chinese goods, port managers are bracing for the prospect of canceled shipments and lost jobs.

“It would be a game-changer,” said Mario Cordero, executive director of the Port of Long Beach, California. “It would be detrimental to jobs at the port and detrimental to the state and national economy.”

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