JOHANNESBURG: Economists here have cautioned that the global economy and markets would be affected should the U.S.-China trade tensions drag on.
“If these are not resolved, they might lead to higher interest rates in the United States,” said Jannie Rossouw, head of the Economic and Business Sciences School at Wits University, in a recent interview with Xinhua, reports Xinhua.“At the same time, it might lead to other countries following a similar strategy, which would lead to less trade in the world,” he added.
“We should also remember that with import tariffs, Americans will pay more for Chinese goods than what they’ve been paying,” he said, adding that the failure to reach an agreement might also result in slower economic growth.
The economist added that imposing tariffs on Chinese products was also part of U.S. President Donald Trump’s campaign strategy.
“Trump is starting his 2020 re-election campaign, and he’s trying to show strong conduct in the hope that this will give him support of the American people,” he said.
In the latest flare-up of U.S.-China trade tensions, Washington increased additional tariffs on 200 billion U.S. dollars’ worth of Chinese imports from 10 percent to 25 percent earlier this month, and has threatened to raise tariffs on more Chinese imports.
In response, China has announced that it will raise additional tariffs on a range of U.S. imports from June 1, and “will fight to the end.”Amid widespread worries about global economic uncertainties incurred by recent tariff hikes, China has reiterated that escalating trade tensions “serve no one’s interests” and will “tie down the world economy as well,” and has called on the United States, which started the row, to get back on the right track as soon as possible and meet China halfway in achieving a mutually beneficial and win-win agreement on the basis of mutual respect.
Dawie Roodt, chief economist at financial services company Efficient Group, told Xinhua that he wishes a deal could be reached soon.
“I’m afraid if there’s no proper resolution, it would affect the world’s economy,” said Roodt. “Small economies would also be negatively affected.”