The director of the United Nations International Trade Center told Reuters on Friday that comprehensive customs duties during the administration of US President Donald Trump and the corresponding measures may have a catastrophic impact on developing countries and cause worse damage even from reducing foreign aid.
According to the center, global trade may shrink between 3%and 7%, and global GDP may decrease 0.7%, and developing countries will be the most affected.
“If this escalation between China and the United States continues, he will lead to a 80% decrease in trade between the two countries, and the implications of this may be disastrous at all levels,” Pamela Cook Hamilton, Executive Director of the International Trade Center, told Reuters.
The global markets are still facing unrest today, Friday, following Trump’s announcement of the suspension of customs duties 90 days on dozens of countries, while the fees on Chinese imports increased, which actually raises them to 145% when taking the fees imposed earlier in the year in mind.
Beijing raised its customs duties on the United States with every increase approved by Trump, and the Chinese Finance Ministry said today that Beijing will impose customs duties by 125% on American goods as of tomorrow, an increase of 84% announced earlier.
“The customs duties may lead to a much more harmful impact than abolishing foreign aid,” said Cook Hamilton, warning that developing economies are facing the risk of losing the economic gains they have achieved in the past few years.
The expectations of the International Trade Center are based on data that they collected, and the impact of the suspension of customs duties does not reflect 90 days and increase customs duties later between China and the United States.
Last Wednesday, the World Trade Organization estimated that trade tensions between the United States and China may reduce the trade of commodity between the two economies by up to 80%.
“This eye approach to the eye is among the two largest economies in the world, which together represents about 3% of global trade, bearing broader impacts that may cause great harm to global economic expectations,” the organization said.
A statement by the organization added that the division of the global economy into two blocs in this way may lead to a decrease in the global real gross domestic product in the long run approximately 7%.
