The Organization for Economic Co-operation and Development (OECD) says that an increase in the dispute between Washington and Beijing would likely result in a fall of up to 0.7% in global GDP by 2021-22.
The estimate is part of the May Economic Outlook released on Tuesday, where the OECD lowers the forecast for global economic growth.
"It is estimated that the new measures announced in May, if maintained, will potentially further reduce GDP in the US and China by an additional 0.2-0.3% on average in 2021 and 2021," says the OECD , pointing out that the impact on the increase in consumer prices would be 0.3% in 2020.
Against this background, the impact on the world economy of this rate increase could be quantified at almost $ 600 billion, writes The Guardian.
Issuing a pessimistic assessment of the global economy as tensions between the world's two largest economies continue to boil, the OECD said the global economic outlook has weakened sharply and growth is expected to remain below expected. The entity says both the US and China will get out of this rate hike.
The base scenario points to US growth of 2.8 percent in 2019, then slowing to 2.3 percent in 2020. China is expected to see growth grow by 6.2 percent in 2019 and then 6 percent by 2020
"World trade would grow close to 1 percent below the baseline scenario by 2021, with import volumes in the US and China falling by about 2 percent," the OECD team estimates, noting that US GDP would be 0.6% lower and Chinese 0.8%. The main trading partners of the two countries, notably the European Union, would be affected as demand would contract.
The long-running trade dispute between the two economic superpowers unexpectedly intensified earlier this month when Trump raised rates to the Chinese from 10 percent to 25 percent, about $ 200 billion worth of Chinese products reaching USA. China topped tariffs of $ 60 billion on US imports.