Trump's China Trade War Tied to Weakest Economic Outlook Since 2008 Recession, International Economic Group Says

Global growth may weaken to a level that has not occurred since the 2008 financial crisis, the Organisation for Economic Co-operation and Development (OECD) announced in a report released Thursday that pointed to President Donald Trump's trade war with China as a key cause of declining economic prospects.

Global economic growth is expected to slow to 2.9 percent in 2019, the OECD said. The organization said that growth would tick slightly upward to 3 percent in 2020. Predicted growth estimates have fallen slightly since May, when the organization predicted growth of 3.2 percent in 2019 and 3.4 percent in 2020.

"The global economy is facing increasingly serious headwinds and slow growth is becoming worryingly entrenched," OECD Chief Economist Laurence Boone said in a press release. "The uncertainty provoked by the continuing trade tensions has been long-lasting, reducing activity worldwide and jeopardising our economic future. Governments need to seize the opportunity afforded by today's low interest rates to renew investment in infrastructure and promote the economy of the future."

In its press release, the OECD also said that uncertainty about Brexit and the slowdown in the Chinese economy—which grew at 6.2 percent in the second quarter of 2019, the slowest rate since the government started releasing data—would weigh on future growth.

The report is the latest evidence of the damaging effects of Trump's trade wars on U.S. and global economic prospects. OECD economists projected the U.S. economy would grow 2.4 percent in 2019 and percent in 2020, down from May projections and below the 3 percent that the Trump administration has targeted. The president previously floated the possibility of reaching 6 percent economic growth.

Despite mounting evidence, the Trump administration has maintained that the protracted trade war with China is not hurting the U.S. economy.

"It's fair to say it's impacted the Chinese economy," Treasury Secretary Steven Mnuchin said earlier this month while speaking on Fox Business Network. "We have not yet seen any impact on the U.S. economy."

But evidence contradicts the claims coming from the White House. Tariff revenue has increased due to the duties, which now affect more than two-thirds of U.S. consumer items imported from China. The latest tranche of tariffs, which was implemented on September 1, levied import fees on an additional $125 billion worth of items; $250 billion of imports from China were already subjected to tariffs.

JPMorgan Chase said in a note last month that, if Trump levies duties on all imports from China, as he has threatened to do, the average American household will pay a $1,000 each year due to the trade war. Other estimates, such as that of the Peterson Institute for International Economics, which estimates the annual cost per household closer to $1,300, are higher.

Trump, Xi
China's President Xi Jinping greets President Donald Trump before a bilateral meeting on the sidelines of the G20 Summit in Osaka on June 29. BRENDAN SMIALOWSKI/AFP/Getty Images