WASHINGTON - US tariffs on China won't fix the trade deficit, and neither will weakening the US dollar through interest rate cuts, International Monetary Fund economists said on Wednesday .
"Higher bilateral tariffs are unlikely to reduce aggregate trade imbalances, as they mainly divert trade to other countries," Prof Gopinath warned in a blog titled"Taming the Currency Hype", co-authored by fellow IMF researchers Gustavo Adler and Luis Cubeddu. The authors warned that"one should not put too much stock in the view that easing monetary policy can weaken a country's currency enough to bring a lasting improvement in its trade balance".
'BEARING THE BURDEN' With the IMF and others warning that his trade war is slowing global growth, and as warning signs of a US recession flashing red, Mr Trump has doubled down on his attacks on the Federal Reserve and on China. Just last month, the IMF again downgraded its global growth forecast, and said the trade tensions make for a"precarious" 2020, and said the tariffs threaten to exacerbate the slowdown of China's economy.
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