The whole world is caught in the cross fire of two superpowers. The repercussions are unpredictable and have serious consequences on the global economy

While the International Monetary Fund (IMF) was preparing its last report in which it was increasing the estimates on the evolution of the world economy this year, a series of events already changed the overall image, a New York Times analysis shows.

One of the main economic analysis institutions in the world published its last economic report on Tuesday. But the mediocre forecasts of the IMF do not reflect the chaotic situation in which the global economy is located, writes the global economic correspondent of The New York, Patricia Cohen, in his analysis in the American newspaper.

In his report called “World Economic Outlook”, published on October 14, the IMF has revised its estimation from April, when the United States rocked global commercial norms by announcing drastic customs.

“The good news is that the decrease in economic growth is at the modest limit of the interval,” the IMF said on Tuesday, which estimated a global increase of 3.2% this year and 3.1% in the following year, which represents a cumulative reduction of 0.2 percentage points compared to its forecasts, “the IMF said.

But a series of events have already changed the overall image, according to The NYT analysis. The new American rates applied to the wooden furniture, furniture and kitchen cabinets, which are expected to cause the costs of building housing, have also entered into force on Tuesday.

Europe, trapped in cross -fire fire

Last week, Beijing decided to drastically intensify restrictions on the export of rare metals, essential materials for the manufacture of semiconductors, mobile phones, wind turbines and almost all other modern gadgets. New restrictions on the equipment needed to produce batteries for electric cars are also scheduled to enter into force next month.

Trump's initial anger has been talked on the weekend, after his reaction led to the sharpest decrease in April, when the first series of customs rates imposed by the president was announced, writes NTY. However, his threat of imposing a 100% additional fee on China imports has remained in suspense.

“The relationship between the US and China is extremely unstable,” said Richard Portes, a teacher at London Business School. “It is not really known what to expect from day to day, and this is typical for the current administration,” he said.

The increased tension between the two economic superpowers also affects other countries – that is, almost all countries that are caught in the cross fire. The restrictions imposed by China on metals and magnets, for example, will affect the European car producers that use these materials and transport them over the borders of Europe. And the taxes applied to ships manufactured in China are applied even to non-Chinese shipping companies that make a stopover in American ports.

On Tuesday, the Chinese government intensified reprisals, adding five American branches of the South Korean shipping company Hanwha on the list of sanctions, accusing the branches of “supporting and assisting” the United States in their actions in the Naval Construction Industry.

Beijing and Washington also exert pressure on countries around the world to take the part of one of the two parties. Mexico, one of the largest Chinese car buyers in the world, proposed the application of a 50% customs duty last month, after intense pressures from the Trump administration.

A protective impulse is rapidly spreading

India, meanwhile, approached China after the White House, irritated by the continuous Russian oil purchases by New Delhi, imposed up to 50% on Indian products. In August, Prime Minister Narendra Modi visited China for the first time in seven years to participate in a conference on Security and Economy-a public demonstration of the Indian leader that his country has many allies if the Trump administration continues to isolate it.

Ever since Trump has taken over, changes in global commercial policy have occurred both at high speed and slow down, having extensive and unpredictable repercussions.

When Trump announced this summer to apply 50% rates to most steel and aluminum imported in the United States, British steel producers felt lucky. Their government had already concluded an agreement by which their steel was to be charged with only half of this amount, ie 25%.

But the atmosphere in the UK was considerably worse last week, when the European Union announced its own series of punitive rates for the steel imported in its 27 countries block. The policy gave a strong blow to the British steel industry, which exports almost 80% of its production to the European Union.

The UK, however, was not the target of this policy, but only a spectator of measures directed against Beijing and Washington.

The 50% rate of the EU was directed against China, who was accused of selling steel at undercooked prices on the world market. The tax was also designed for the purpose of placing the European Union in a better negotiation position with the United States.

“The Union is ready to collaborate with countries that share the same vision, in order to protect their economies from global overcapacity,” the executive of the European Union last week. “We will continue to explore ways of collaborating with the US.”

This protective impulse is rapidly spreading, Canada, Brazil and Mexico taking measures to defend their local steel producers.

“The degree of uncertainty is huge”

Despite frequent changes in commercial policy, the global economy will remain strongly integrated, said Lucrezia Reichlin, a teacher at London Business School, even though the center of gravity moves to Asia and moves away from the West.

For now, the economic growth rate of the United States and China is declining, and the short -term perspectives are characterized by a generalized unpredictability, writes NYT.

Richard Portes, from London Business School, has summarized the dynamics of the two largest savings: “China has stable, clear and determined goals. The Trump administration changes its opinions and policies daily.” “The degree of uncertainty is huge,” he added, “and this has consequences on the global economy.”

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