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WTO lowers trade growth forecast

The World Trade Organization has downgraded its prediction for 2019 global trade. The "darkening outlook" comes just months after the WTO predicted a more optimistic outcome.

Signs with the US flag and Chinese flag at the Qingdao free trade port in China

The World Trade Organization (WTO) on Tuesday slashed its 2019 trade growth forecast to 1.2% percent from a 2.6% rise predicted in April.

The Geneva-based body blamed the sharp downgrade on escalating trade tensions, as well as Brexit uncertainty in Europe. 

"The darkening outlook for trade is discouraging but not unexpected," WTO director general Roberto Azevedo said in a statement.

WTO economists had warned during its annual forecast in April that systemic threats to global trade — notably retaliatory tariffs between China and the United States — would continue to hamper the flow of goods.

Tuesday's warning came amid a long-running trade spat between the two world powers, which showed no sign of ending, despite face-to-face negotiations in Shanghai in July.

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    Solar panels and washing machines

    The first round of tariffs in 2018 were on all imported washing machines and solar panels — not just those from China. A study by economists from the Federal Reserve Bank of New York, Columbia University, and Princeton University found that the burden of Trump's tariffs — including taxes on steel, aluminum, solar panels falls entirely on US consumers and businesses who buy imported products.

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    China hike

    On Friday May 10, 2019 President Donald Trump imposed sanctions on $200 billion (€178 billion) worth of Chinese goods. The move raised tariffs from 10% to 25% on a range of consumer products, including cell phones, computers and toys. China's Commerce Ministry said it "deeply regrets" the US decision.

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    Issues with the EU

    In April 2019, the United States said it wanted to put tariffs on $11.2 billion worth of goods from the EU. The list includes helicopters and aircraft from Airbus as well as European exports like famous cheeses such as Stilton, Roquefort and Gouda, wines and oysters, ceramics, knives and pajamas.

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    EU fights back

    The EU imposed import duties of 25% on a $2.8 billion range of imports from the United States in retaliation for US tariffs on European steel and aluminum. Targeted US products include Harley-Davidson motorcycles, bourbon, peanuts, blue jeans, steel and aluminum.

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    European automakers next?

    May 17, 2019 is the deadline for President Trump to decide on imposing tariffs on vehicle imports from the EU. According to diplomats, Germany, whose exports of cars and parts to the United States are more than half the EU total, wants to press ahead with talks to ward off tariffs on automakers Volkswagen, Mercedes and BMW.

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    India not exempt

    India, the world's biggest buyer of US almonds, on June 21, 2018 raised import duties on the nuts by 20% and increased tariffs on a range of other farm products and US iron and steel, in retaliation for US tariffs on Indian steel. Trump said last month that he would end preferential trade treatment for India, which would result in US tariffs on up to $5.6 billion of imports from India.

  • US, Canadian and Mexican flags (Reuters/E. Garrido)

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    North American neighbors in tariff spat

    Mexico on June 5, 2018 imposed tariffs of up to 25% on American steel, pork, cheese, apples, potatoes and bourbon, in retaliation for US tariffs on Mexican metals. While to the north, Canada on July 1 imposed tariffs on $12.6 billion worth of U.S. goods, including steel, aluminum, coffee, ketchup and bourbon whiskey in retaliation for US tariffs on Canadian steel and aluminum.


Tit-for-tat tariffs

Last month, the US imposed a 15% levy on more than $125 billion (€115 billion) in Chinese imports including smart speakers, Bluetooth headphones, books, diapers and footwear.

The additional US measures were added to the 25% tariffs on $250 billion in imports already in place.

China has issued its own tit-for-tat tariffs, taxing about $120 billion worth of US goods.

Some have been hit with multiple increases, while about $50 billion of US goods is unaffected, likely to avoid disrupting Chinese industries.

Deadlock

US President Donald Trump has accused China of using predatory tactics, including forcing foreign companies to hand over technology and stealing trade secrets. The dispute has weighed on global markets and soured relations between Washington and Beijing.

The two sides have agreed to hold further discussions in Washington in early October, later than expected.

The WTO also said on Tuesday that North America showed the fastest growth of exports of any region in the first half of the year, at 1.4%, although the rise of imports into North America were also greater than elsewhere, at 1.8%.

kw/rc (AFP, Reuters)

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