IMF says US companies paying China tariff costs, warns over growth
US and Chinese consumers "are unequivocally the losers from trade tensions" between the two nations, the International Monetary Fund said in a blog on Thursday.
The IMF also pointed out that according to data from the Bureau of Labor Statistics, tariff revenue collected has been paid "almost entirely" by US importers.
"Some of these tariffs have been passed on to US consumers, like those on washing machines, while others have been absorbed by importing firms through lower profit margins," the IMF said. "A further increase in tariffs will likely be similarly passed through to consumers. While the direct effect on inflation may be small, it could lead to broader effects through an increase in the prices of domestic competitors."
Earlier this month, US President Trump said he was "very happy with over $100bn a year in tariffs filling US coffers". But the IMF said in its blog that the bilateral trade deficit between the US and China remains broadly unchanged.
The IMF said that while the impact on global growth is still relatively modest, the latest escalation could jeopardise the projected recovery in global growth this year.
"The additional impact of the recently announced and envisaged new US-China tariffs, expected to extend to all trade between those countries, will subtract about 0.3% of global GDP in the short term, with half stemming from business and market confidence effects."
Earlier this month, the US lifted tariffs on $200bn of Chinese goods to 25% from 10% following a breakdown in talks with China, which then retaliated by announcing tariffs on $60bn of US goods.
Tensions between the two escalated earlier on Thursday after China's Commerce Ministry said that trade talks can't continue unless the US addresses its "wrong actions".
According to a CNBC translation, Ministry of Commerce spokesperson Gao Feng said earlier: "If the U.S. would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue."
This came as Panasonic became the latest company to stop doing business with China's Huawei in order to comply with US restrictions.