Trump: ‘I am the chosen one’ to take on China over trade
US President defends trade war and says a deal with China is possible
WASHINGTON: US President Donald Trump on Wednesday said he was "the chosen one" to address trade imbalances with China, even as congressional researchers warned that his tariffs would reduce US economic output by 0.3 per cent in 2020.
Mr Trump told reporters his life would be easier if he had not mounted a trade war with China. But he defended his actions and said he believed a trade deal between the world's largest economies was still possible.
"I am the chosen one... so I am taking on China. I'm taking on China on trade. And you know what? We're winning," Mr Trump said, claiming a title often used to refer to religious figures.
Mr Trump acknowledged for a second consecutive day that the trade war with China could harm the US economy, although he insists a recession is not on the horizon.
The nonpartisan Congressional Budget Office (CBO) on Wednesday became the latest independent institution to warn about the consequences of tariffs Mr Trump has ordered imposed against China and a host of other countries.
The CBO said changes in US and foreign trade policies since January last year will reduce inflation-adjusted US gross domestic product by 0.3 per cent from what it would be otherwise in 2020.
The International Monetary Fund also weighed in.
It said global economic output could be reduced by as much as 0.5 per cent in 2020 as a result of tariffs.
US tariffs on China would not fix the trade deficit, and neither will weakening the US dollar through interest rate cuts, it said on Wednesday.
In unusually blunt language, the blog post seemed targeted straight at President Trump, who has persistently demanded that the Federal Reserve cut interest rates to weaken the US dollar and juice the economy, while imposing round after round of tariffs on China to reduce the deficit he describes as theft.
But the US policy moves are counterproductive, would not achieve the desired results, and will slow the global economy, IMF chief economist Gita Gopinath said.
"Higher bilateral tariffs are unlikely to reduce aggregate trade imbalances, as they mainly divert trade to other countries," Ms Gopinath warned in a blog titled "Taming the Currency Hype," co-authored by fellow IMF researchers Gustavo Adler and Luis Cubeddu.
"Instead, they are likely to harm both domestic and global growth by sapping business confidence and investment and disrupting global supply chains, while raising costs for producers and consumers." - REUTERS, AFP