The trade friction between China and the United States will negatively affect the U.S. economy by offsetting tax cut benefits and causing higher consumer prices, a trade expert told Xinhua on Friday.
William Reinsch, the school chair in international business at the Center for Strategic and International Studies, said that the U.S. economy is benefiting right now from the tax cuts since the end of last year. But the fast growth will be offset by trade declines and higher consumer prices which will eventually change the momentum of economic growth.
"Most economists predict that the tax cut effect will begin to decline as well after a year or so and ultimately I think it will be a disaster because we have to pay for it eventually," said Reinsch.
He also predicted that the impact of trade tension on American consumers will take some time to show up, adding "the significant impact is not likely to occur until the first or the second quarter next year."
Talking about the impact on global economy, Reinsch said the trade friction will lower the global economic growth rate and at the same time have a spillover effect on protectionism.
"If one country breaks the rules, particularly a big one, and gets away with it, it becomes easier for others to do the same," Reinsch said.
The United States has announced its decision to impose additional 10 percent tariffs on 200 billion U.S. dollars worth of Chinese products from Sept. 24, saying that it will take other escalating tariff measures.
In response, China announced it will levy additional tariffs on U.S. products worth 60 billion dollars starting from Sept. 24.