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IMF Says Trump’s Trade War will Ruin the World Economy

The trade war launched by U.S. president Donald Trump against the world will impoverish countries if not immediately resolved, warns the International Monetary Fund (IMF).

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Washington, DC, United States (4E) – The trade war launched by U.S. president Donald Trump against the world will impoverish countries if not immediately resolved, warns the International Monetary Fund (IMF).

The trade war between the U.S. and China risks making the world a “poorer and more dangerous place” said the IMF in its latest World Economic Outlook report. The IMF said a full-blown trade war between the world’s largest and second largest economies will cause a significant dent in the economic recovery from the Great Recession of 2018.

Trump’s trade war is affecting households, businesses and the wider economy. IMF Chief Economist Maurice Obstfeld noted that trade policy reflects politics and politics remain unsettled in several countries, posing further risks.

Because of these negative factors, the IMF lowered its forecast for global growth this year and in 2019. The IMF now estimates the global economy will grow by 3.7 percent this year and next year. The estimate for 2018 is 0.2 percent lower than its previous forecast.

The IMF warned of a permanent hit to growth if the U.S. goes ahead with a threat to impose a 25 percent tariff on all imported cars. These global tariffs will hurt business confidence, investment and borrowing costs.

The fund said risks to the short-term outlook for the world economy had “shifted to the downside.” It explained that its downgrades to global growth also reflect predictions of a slower expansion in the eurozone, as well as turbulence in a number of emerging market economies such as Argentina, Turkey and Venezuela.

The IMF acknowledged its earlier projections about world economic growth now appear to be “over-optimistic.” It noted that risks from “further disruptions in trade policies” have become more prominent.

The U.S. will suffer greatly from the unnecessary trade war it initiated. In this worst case scenario, the U.S. economy will take a significant hit. On the other hand, economic growth in China will drop below five percent in 2019 compared with a current prediction of 6.2 percent.

Obstfeld said the world will become a “poorer and more dangerous place” unless world leaders worked together to raise living standards, improve education and reduce inequality.

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Politics

US Budget Deficit Hits Record $204.9B for November

The federal budget deficit surged to a record for the month of November of $204.9 billion, but a big part of the increase reflected a calendar quirk.

In its monthly budget report, the Treasury Department said Thursday that the deficit for November was $66.4 billion higher than the imbalance in November 2017.

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Washington, DC, United States (VOA) – The federal budget deficit surged to a record for the month of November of $204.9 billion, but a big part of the increase reflected a calendar quirk.

In its monthly budget report, the Treasury Department said Thursday that the deficit for November was $66.4 billion higher than the imbalance in November 2017.

But $44 billion of that figure reflected the fact that December benefits in many government entitlement programs were paid in November this year because Dec. 1 fell on a Saturday.

For the first two months of this budget year, the deficit totals $305.4 billion, up 51.4 percent from the same period last year. The Trump administration is projecting that this year’s deficit will top $1 trillion, reflecting increased government spending and the loss of revenue from a big tax cut.

The new report showed that the higher tariffs from President Donald Trump’s get-tough trade policies are showing up in the budget totals. Customs duties totaled $6 billion in November, up 99 percent from November 2017.

Trump has imposed penalty tariffs on steel and aluminum imports froma number ofcountries and on $250billionof Chinese imports as the administration seeks to apply pressure to other countries to reduce their barriers to American exports. However, China and other nations have retaliated by imposing penalty tariffs on U.S. exports, sparking a tit-for-tat trade war.

The administration still believes it will prevail and is currently in talks with China over trade practices the administration feels are unfair to American companies and workers.

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Politics

Criminal Probe Launched into Trump’s Inaugural Spending

Federal prosecutors based in Manhattan have launched a criminal probe to determine if $107 million in donations to then President-elect Donald Trump’s inaugural committee were illegally spent.

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Arthur J. Villasanta – Fourth Estate Contributor

Manhattan, NY, United States (4E) – Federal prosecutors based in Manhattan have launched a criminal probe to determine if $107 million in donations to then President-elect Donald Trump’s inaugural committee were illegally spent.

Investigators are also looking into whether some of the committee’s top spenders traded money for access to the incoming Trump administration. They also want to know if Trump’s people sought money in exchange for “policy concessions or to influence official administration positions.”

Giving money in exchange for political favors can run afoul of federal corruption laws. Diverting funds from Trump’s inaugural committee, which is a registered nonprofit, also violates federal law.

More specifically, Trump’s inaugural committee is being probed for accepting cash-for-access from Middle Eastern nations like Qatar, Saudi Arabia and the UAE. Secret recordings made by Trump’s personal lawyer Michael Cohen revealed these cash-for-access transactions.

Investigators are focusing on Middle Eastern donors like Qatar, Saudi Arabia and the United Arab Emirates. They’re trying to determine if these nations used straw donors to disguise their donations to Trump’s inaugural committee and the pro-Trump super PAC, Rebuilding America Now, in hopes of buying influence.

Foreign nations are banned from contributing to federal campaigns, PACs and inaugural funds by law.

Federal prosecutors have questioned Richard Gates, ex-partner of former Trump campaign chairman Paul Manafort. In February, Manafort pleaded guilty to conspiracy and lying charges lodged by special counsel Robert Mueller.

Gates served as deputy chairman of Trump’s inaugural committee. He’s cooperated with investigators in Mueller’s probe of Russian interference during the 2016 U.S. presidential election.

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China Beginning to Feel the Pain from Trump’s Trade War

China said its retail sales and industrial output growth for November badly missed their targets, confirming that China’s economy continues to slow down amid Trump’s trade war.

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Arthur J. Villasanta – Fourth Estate Contributor

Beijing, China (4E) – China said its retail sales and industrial output growth for November badly missed their targets, confirming that China’s economy continues to slow down amid Trump’s trade war.

China’s National Bureau of Statistics (NBS) reported that industrial output grew 5.4 percent year-on-year, the slowest pace in almost three years. This growth was also lower than the 5.9 percent analysts had predicted.

On the other hand, retail sales rose 8.1 percent, which is the weakest pace since 2003. This pace is also lower than the 8.8 percent analysts expected. November retail sales growth was down from 8.6 percent in October.

Fixed asset investment rose 5.9 percent from January to November, marginally higher than the 5.8 percent forecast by economists. FAI rose 5.7 percent from January to October.

Despite Trump’s trade war, data from China unexpectedly shows its economy on the upside for much of 2018. Manufacturing benefited from front-loading, or rushing to ship as much goods as possible, before tariff deadlines hit on Jan. 1, 2019.

The weaker Chinese data in November shows the positive impact of front-loading is beginning to vanish and that downward pressure on the Chinese economy is increasing, said RBC Capital Markets in Hong Kong. Industrial output and retail sales data released on Friday were ugly, said the firm.

NBS said after the release of the data that the impact from bilateral trade tensions with the U.S. was not yet obvious. So, the worst is yet to come and policymakers will be very worried, particularly with consumption growth falling off a cliff.

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