The collateral damage caused by the US trade wars has expanded to spread from Iceland's bays to automobile factories in Japan.

Central bankers and finance ministers traded bleak stories of economic suffering at the fall meetings of the IMF and World Bank in Washington this week. Some also pointed to how much US policy changed from it in the 1940s, when Washington itself co-founded the fund.

No limits to prosperity

World Bank President David Malpas said at a session last week that the world economy at the time “suffered severe crises over a decade from high tariff barriers, stagnation and war,” prompting then US Treasury Secretary Henry Morgentho to call for Global economic system. The American message at the time was, "First, there is no limit to prosperity." Second, shared prosperity in general benefits everyone. ”

The IMF managing director, Kristalina Georgieva, said that as IMF meetings involving its 189 member states drew to a close, the unintended negative effects of trade wars were becoming clearer. "Everyone is a loser," she said.

Fifteen months ago, the United States, the world's largest importer, began a bitter war by imposing tariffs on products imported from China, the world's largest exporter. US President Donald Trump has renegotiated trade relations with many of Washington's top trading partners and even turned some agreements upside down.

The IMF estimated this week that the fallout from this approach would slow global growth in 2019 to 3 percent, its lowest level in 10 years.

This suffering is not evenly distributed. The United States remains the least vulnerable of the 20 largest economies in the world to lower exports, partly because of the huge consumer spending base in the domestic market.

European suffering

The European Union's Commissioner for Economic and Financial Affairs, Pierre Moscovici, said the negative aspects are felt, especially in European countries that "depend on exports and are open to trade."

More than 40% of GDP was derived from exports in 2018, the highest in any of the world's major economic powers. German Finance Minister Olaf Schulz told reporters that blurred vision in the business community was widespread. Germany's BGA recently cut its forecast for German export growth in 2019 to just 0.5% from 1.5%. As a result, many companies are scaling back their investment plans, which will have repercussions in the coming years.

Schultz said it was clear that concerns about Britain's imminent exit from the EU and the trade dispute between the EU and the United States had negative effects on global economic growth. "The most important problem remains the factors we cannot measure, namely the reluctance to invest," he said.

suffering

Sufferers have also reached non-exporting countries, such as Iceland, which became the first economy in the developed world to seek help from the IMF after its banking system collapsed in 2008. It has since rebuilt its economy in a transformation that some have called a miracle, and now the situation is threatened.

"We have become dependent on tourism," said Iceland's central bank governor, Asjer Johnson, with the annual number of visitors rising five-fold to 2.5 million since the crisis. However, the number of foreign visitors has fallen sharply since trade wars began, dropping 15.6% this summer from the previous year.

The central bank governor added that Iceland, which has a population of about 300 thousand people, formed foreign exchange reserves thanks to the increase in visitors, but these reserves are starting to decrease.

Johnson said trade ties between countries have increased peace in the world in recent decades, but recent experience shows that "you cannot take world trade for granted."

No American immunity

On Friday, Japan's cabinet, which helps coordinate government policy, lowered its estimate of factory output in October.

A government official said in a statement that weak production was largely due to a decline in car exports to the United States, after steady growth until the spring.

"The recovery of global growth is being delayed," said Bank of Japan Governor Haruhiko Kuroda. "The Japanese economy is experiencing a very weak export, which affects factory production."

The United States has not been spared the consequences of trade wars. US farmers have been particularly hard hit by China's tariffs on US agricultural products, prompting the Trump administration to distribute billions in aid to farmers. Domestic economic development has also been hampered by Washington imposing tariffs on steel and aluminum trade, and by the uncertainty surrounding a new North American free trade agreement bringing together the United States, Mexico and Canada.

West Sacramento, California mayor Christopher Cabaldon said the bids for a $ 100 million infrastructure project in the city were 80% higher than expected, partly because construction companies needed to calculate the impact of higher costs and the risk of additional charges in the future.

"Even in small cities like ours, we are seeing the effects of trade," he told Reuters ahead of the IMF and World Bank meetings. "We have come to realize the deep integration of our local economies into the global system."

"Most of my plans for economic development are developing on a global stage and do not pass unhindered," he said.

Secession of emerging markets

Trade tensions are driving African countries towards greater self-reliance on the continent. Kenyan Acting Trade Minister Okor Yatani Kanacho said: "We must take it upon ourselves to develop trade between us."

Senegalese Finance Minister Abdoulaye Daoud Diallo told reporters that trade tensions between the United States and China would affect African countries in the energy sector and reduce funds available in financial markets. He added that the dispute underscores the importance of the African Free Trade Agreement. Other emerging markets are also under pressure. "Ukrainian exporters are facing deteriorating conditions in global commodity markets," said Deputy Central Bank Governor Katrina Rogkova.

To make matters worse, she said, "the intensification of geopolitical conflicts has led to higher oil and natural gas prices in the world."

Bahrain's finance minister, Shaikh Salman bin Khalifa al-Khalifa, said the Gulf region was also affected by trade tensions and the resulting slowdown in investment, although geopolitical concerns over Iran, for example, were another key element. "Trade tensions create ambiguity, and no one is free from ambiguity."

Peru lowered its estimate of economic growth in 2019 to 3 percent in August from 4.2 percent based on trade factors. Mexico is headed for an economic recession that officials say could be more difficult to reverse than the recent recession in more than 10 years. "The Great Depression took everyone by surprise, but the economic powers were willing to cooperate and work together to get out of it," said Mexican Finance Minister Arturo Herrera. "The recession did not surprise anyone, but there is little willingness to cooperate."

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International, this week,

That fallout approach

Trade Wars

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Global in 2019

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Its rates since 10

Years.

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The 20 largest in

World to drop

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