The trade war has is having an impact on global markets
Germany, Japan, South Korea, the US and China are among those who will be hit hardest next year, according to the Moody’s report.
Global economic growth will slow in 2019 and 2020 to just under 2.9 percent, down from an estimated 3.3 percent in 2018 and 2019, Moody’s said.
And the analysis has also suggested there is no end in sight to the disagreement, which could continue “for some time” – a concern previously expressed by Chinese billionaire Jack Ma, who on Tuesday reiterated his concerns about the “stupid” dispute.
The two superpowers have been at loggerheads ever since US President Donald Trump slapped punishing new tariffs of 25 percent and 10 percent respectively on Chinese steel and aluminium imports, triggering Beijing to respond with levies of its own on American exports.
Mr Trump has shown no signs of backing down on the issue, and warned on October 30 he had $267 billion in additional tariffs ready if the two countries failed to reach a deal on trade – although he also hinted this was a possibility.
Moody’s said the “geopolitical frictions” between US and China would “likely persist for some time”.
The slowdown is likely to have a negative impact not only on China and the US, but also on other open economies, especially Germany, Japan and South Korea, it said.
Growth in advanced economies will slow but remain solid next year, it predicted – but G20 emerging markets growth will be weak.
The trade war between the US and China will cause collateral damage, Moody’s has warned
Jack Ma has called the trade dispute “stupid”
As such, Moody’s also said the dispute would weigh on global trade growth and reshape trade flows and supply chains.
It also suggested the United States-Mexico-Canada Agreement (USMCA) – a new trade deal to replace the North American Free Trade Deal (NAFTA) which Mr Trump has been a vehement critic of – would be ratified next year.
China’s top diplomat, State Councillor Wang Yi, has said a planned meeting between Chinese President Xi Jinping and Mr Trump at the G20 summit in Buenos Aires this month will be of great significance to both sides.
Speaking during a meeting with former US Secretary of State Henry Kissinger, who is on a visit to the country, Yi said China and the United States can and should appropriately resolve their trade dispute through talks.
China’s exports to the US and the rest of the world grew more than expected in October
Trade war is the most stupid thing in this world
Speaking at a conference in Shanghai organised by the Chinese government, Alibaba co-founder Mr Ma, who was recently confirmed as China’s richest man, said: “Trade war is the most stupid thing in this world.
“Nobody can stop the free trade.”
In an thinly veiled criticism of Mr Trump’s approach, he suggested the purpose of trade should be to promote peace and communication rather than conflict, branding the rise of “winner-takes-all” protectionist measures promoted by Mr Trump as misguided.
Mr Ma met Mr Trump in New York shortly after his 2016 Presidential election victory, pleading to create one million new US jobs by helping small businesses sell their products in China.
However, the plan has now been shelved, with Mr Ma saying in September: “This promise was on the basis of friendly China-US cooperation and reasonable bilateral trade relations, but the current situation has already destroyed that basis.
“This promise can’t be completed.”
Research by UBS has revealed a 30 percent drop in imports of products listed as being subject to a package of tariffs imposed by the US Government on July 6.
It was too early to judge the impact of a further round of tariffs totally $200 million which were imposed on September 24.
However, China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates which are due to kick in at the start of next year.