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IMF: US To Cut Trade Deficit By Imposing Tariffs Is Misguided
Aug 10, 2018

Morris Aubsteffeld, chief economist of the International Monetary Fund, said in an interview with Xinhua news agency that the U.S. attempt to cut the trade deficit by imposing tariffs was misguided.


In particular, he is concerned that the Trump's mistaken perception of the trade deficit could lead to more protectionist policies that will not only help resolve global trade imbalances but exacerbate trade tensions and undermine global economic growth. The IMF's research shows that trade policy adjustments do not have a significant impact on trade imbalances, and that the root cause of the US trade deficit lies not in trading itself but in macroeconomics.


Aubsteffeld said fiscal stimulus, such as incremental U.S. tax cuts, would push the US to raise interest rates faster and strengthen the dollar, and eventually further widen the trade deficit. The U.S. trade deficit in goods and services totaled $291.2 billion trillion in the first half of the year, up 7 per cent year-on-year, according to data released by the Commerce Department. 2%.


This shows that the imposition of tariffs does not effectively reduce the trade deficit. According to a recent IMF study, global gross domestic product (GDP) will be 0 lower than the benchmark forecast in the first year of tariff entry, in the most serious scenario, which is the full effect of currently announced tariffs and countervailing measures and undermines global investor confidence. 4%, the second year decreased by 0. 5%, the third year decreased by 0.


4%. Aubsteffeld suggested that trade disputes should "step back" and think clearly about their goals, and then consult at the multilateral level to work together to improve the multilateral trading system such as the WTO and promote global economic growth.


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